A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to:
A. c(Q/I).
B. -b(I/Q).
C. Q/(cI).
D. c(I/Q).
D. c(I/Q).
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Answer the following statement(s) true (T) or false (F)
1. No one benefits when interest rates rise, because everyone's current consumption will be lowered. 2. Future productivity increases will be reflected in higher interest rates today. 3. Increases in interest rates lead to overall net gains. 4. A higher demand for capital implies a lower supply of current consumption. 5. A perpetuity is a bond with an established maturity date.
A policy of maintaining stable interest rates during economic fluctuations will tend to reinforce these fluctuations. A policy of maintaining a constant growth rate in the money supply will tend to cause interest rates to fluctuate, which can cause undesirable fluctuations in investment
Indicate whether the statement is true or false
In Ireland, a pint of beer costs 3 euros. In Australia, a pint of beer costs 4 Australian dollars. If the exchange rate is .8 euros per Australian dollar, what is the real exchange rate?
a. 4/2.4 pints of Irish beer per pint of Australian beer b. 3/3.2 pint of Irish beer per pint of Australian beer c. 3.2/3 pints of Irish beer per pint of Australian beer d. 2.4/4 pints of Irish beer per pint of Australian beer
Deciding what the distribution of income should be is an example of normative economics.
Answer the following statement true (T) or false (F)