Exchange is necessary in an economy if:
a. output is to be produced
b. output is to be consumed.
c. individuals are self-sufficient.
d. families are self-sufficient.
e. labor is specialized.
e
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Consumption expenditures decrease when ________
A) the real interest rate falls B) disposable income increases C) autonomous consumption increases D) all of the above E) none of the above
What's true about both the short-run and long-run in terms of production and cost analysis?
a. In the short-run, one or more of the resources are fixed b. In the long-run, all the factors are variable c. The time horizon determines whether or not an input variable is fixed or not d. The law of diminishing returns is based in part on some factors of production being fixed, as they are in the short run. e. All of the above
Suppose the economy is initially operating at point A in the above figure. Which of the following statements is TRUE?
A) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the short run. B) An unexpected reduction in aggregate demand will cause the economy to move from point A to point C in the short run. C) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the long run. D) none of the above
What assumptions do economists make about the time period known as the short run?
What will be an ideal response?