In the Keynesian model, when desired saving exceeds desired investment,
A) inventories rise.
B) inventories fall.
C) the price level rises.
D) the price level falls.
A
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Briefly explain the difference between absolute and relative PPP
What will be an ideal response?
The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the
nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. If the chemical firm owns the lake, and the beach owner must pay $10 to keep the chemical firm at just one ton of pollution, then A) the beach shuts down and the chemical firm produces one ton of pollution. B) the beach shuts down and the chemical firm produces two tons of pollution. C) the beach operates and the chemical firm produces one ton of pollution. D) the beach operates and the chemical firm produces two tons of pollution.
A consumer spends all of her income on goods x and y. At her optimum,
a. marginal rate of substitution between good x and good y exceeds the ratio of the price of good x to the price of good y. b. her expenditure on good x is equal to her expenditure on good y. c. the slope of her budget constraint is equal to the slope of the highest indifference curve that she can reach while remaining within her budget. d. her valuation of the two goods exceeds the market’s valuation of the two goods.
A rancher raises sheep. Once a year he shears them and sells the raw wool to a processor who cleans it and spins it into yarn. The yarn is then sold to a knitting mill, which produces and sells sweaters. In calculating GDP we would count:
A. the raw wool, the yarn and the sweaters. B. only the yarn and the sweaters. C. only the sweaters. D. only the raw wool and the yarn.