If leisure is a normal good and the economy expands so that national income rises by 3% next year then theoretically what ought to happen to the amount of work that should take place?
What will be an ideal response?
Theoretically the amount of work could either rise, fall or stay the same. As income rises in the country as a whole there are actually two effects that are taking place at the same time. The higher wages are making the opportunity cost of leisure more expensive which should induce people to work more. But the higher income allows workers to be able to afford more leisure. Unless we know which effect is stronger – the income effect or the substitution effect there isn't any way to answer this question definitively by appealing to economic logic alone. It's largely an empirical question.
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Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What is the value of the marginal propensity to consume?
A) 0.7 B) 1 C) 0.3 D) 0
Which of the following is a true statement?
a. A price-taker firm can sell additional units of output without having to lower its price, while a price-searcher firm must lower its price in order to sell additional units. b. A price-searcher firm can sell additional units of output without having to lower its price, while a price-taker firm must lower its price in order to sell additional units. c. Both price searchers and price takers can sell additional units of output without having to lower their price. d. Both price searchers and price takers must lower their price in order to sell additional units of output.
In Figure 24.2, the profit-maximizing level of output is
A. Between 4 and 5 units. B. 4 units. C. Between 2 and 3 units. D. Between 5 and 6 units.
Because the government has so much money, and can print more, it does not need to borrow and therefore rarely pays net interest on debt.
Answer the following statement true (T) or false (F)