Less demand in the economy may increase unemployment; this may lead to less spending which may reduce demand further. This process is called:
a) The upward accelerator
b) The downward multiplier
c) The upward PPF
d) The downward mpc
Answer: b) The downward multiplier
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Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will increase output ________ in Alpha compared to Beta, holding other factors constant.
A. less B. more C. by the same amount D. not at all
Refer to the scenario above. Which of the following statements is true?
A) The discounted value of $3,400 to be received after five years is $3,000. B) Tom's return from investing in his friend's project is higher than the amount received from the bank after five years. C) Tom's return from investing in the bank is higher than the amount received from his friend's project after five years. D) The returns on both investments are likely to be similar and Tom should be indifferent about investing in either options.
The responsiveness of the quantity demanded of one good to a change in the price of a different good is measured by the:
A. price elasticity of demand. B. cross-price elasticity of demand. C. income elasticity of demand. D. price elasticity of supply.
An actual Lorenz curve shows
A. the relationship between income and tax revenue. B. the maximum and minimum wage gaps. C. the relationship between income and earnings potential. D. the share of income received by age group. E. the cumulative share of income earned by quintiles of households.