What is the substitution effect?
What will be an ideal response?
The substitution effect is the effect of a change in price on the quantity bought when the consumer (hypothetically) remains indifferent between the original situation and the new one.
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Refer to Cournot Problem. In the Nash Equilibrium, consumer surplus will be
a. $900 b. $1800 c. $2700 d. $3600
Refer to Figure 1A.2. The slope between points a and c is
A) -5. B) -6. C) 10. D) 30.
Which procedure seems to be most useful to structure a macroeconomic analysis?
a. (1) Analyze the chain reaction of economic causes and effects; (2) Identify the economic shock; (3) Describe the economic setting in the three key markets. b. (1) Analyze the chain reaction of economic causes and effects; (2) Describe the economic setting in the three key markets; (3) Identify the economic shock. c. (1) Identify the economic shock; (2) Analyze the chain reaction of economic causes and effects; (3) Describe the economic setting in the three key markets. d. (1) Identify the economic shock; (2) Describe the economic setting in the three key markets; (3) Analyze the chain reaction of economic causes and effects. e. (1) Describe the economic setting in the three key markets; (2) Identify the economic shock; (3) Analyze the chain reaction of economic causes and effects.
The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A. contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints. B. contractionary fiscal and monetary policies are always undesirable for any developing country. C. it employs economists that know little about developing countries and their economic affairs. D. the conditions tend to be procyclical, therefore worsening the recessions.