Consumers often base their spending on their estimated permanent income
Indicate whether the statement is true or false
TRUE
You might also like to view...
Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, Congress should
A) lower taxes by an amount less than $500 billion. B) lower taxes by $500 billion. C) raise government purchases by more than $500 billion. D) lower government purchases by $500 billion. E) raise government purchases by $500 billion.
When a good is subsidized by the government, the amount of the good produced or consumed declines
a. True b. False Indicate whether the statement is true or false
Suppose the marginal utility of a dollar for Carl is 7 utils and for Judy, 12 utils. According to Lerner, society will maximize its total utility if
a. we transfer money from Carl and give it to Judy as long as the marginal utility of money for Carl is lower than that of Judy's b. we transfer money from Carl and give it to Judy as long as the marginal utility of money for Carl is higher than Judy's c. we transfer money from Judy and give it to Carl as long as the marginal utility of money for Judy is lower than Judy's d. we allow the market to determine the marginal utilities of Carl and Judy regardless of whose is higher e. Carl and Judy have the same utility functions
Which of the following statements is true about purchasing power parity (PPP)?
a. PPP is the normal state between two nations because international markets are perfectly competitive. b. PPP is the normal state between two nations because of government regulations and central bank intervention. c. PPP is the normal state between two nations because interest rates, the spot exchange rate, and the forward exchange rate all adjust to create this condition. d. PPP is the normal state between two nations because arbitrageurs take advantage of any imbalances. e. PPP is rarely the case for most nations in the short-run, but exchange rates tend to move in the direction of PPP in the long run.