Bundle A is worse than bundle B, and bundle C is an average of bundles A and B. Then our usual assumptions about tastes imply that bundle B is at least as good as bundle C.
Answer the following statement true (T) or false (F)
False
Rationale:
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Day care is provided by a competitive constant-cost industry at a price of $40 per child per day. The government wants to increase the availability of day care and thus chooses to build and operate 50 new day care centers across the nation.
(i) In the short run, what happens to the price of day care? Does the total amount of day care provided increase in the short run? What happens to the profits of day care centers? (ii) In the long run, what happens to the size of the day care industry? What happens to the price of day care and the profits of day care centers? Does the total amount of day care provided increase in the long run?
Define induced expenditure and autonomous expenditure. Which expenditure items are induced expenditure and which are autonomous expenditure?
What will be an ideal response?
Governments that discourage profit seeking will tend to encourage more innovation because the best innovators are motivated by inner creativity and not money.
Answer the following statement true (T) or false (F)
Recent policy statements by the FOMC announce and explain its:
A. targets for money growth with no mention of interest-rate targets. B. decisions for long-term interest rates. C. short-term interest-rate and balance-sheet adjustments with no mention of money growth targets. D. decisions for money-growth targets but also mentioning short-term interest-rate decisions.