Suppose our tastes are homothetic. It is often observed that people become more rigid --- more set in their ways --- as they get older. Can you translate this observation into "economics-speak" by discussing which feature of our tastes is likely the be changing as we get older?
What will be an ideal response?
The feature of our tastes that is indicative of "flexibility" is the degree of substitutability in our indifference map. The more substitutable we think of goods, the more flexible we are in terms, whereas we become more inflexible as our tastes treat goods as relatively more complementary.
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Why is the real-world deposit multiplier smaller than 1/RR, where RR is the required reserve ratio?
What will be an ideal response?
Marginal utility is defined as the
a. average amount of satisfaction gained from consuming a product b. total amount of satisfaction gained from consuming a product c. additional satisfaction gained from consuming one more unit of a product d. total amount of satisfaction gained from consuming a product divided by the number of units consumed e. total amount of satisfaction gained from consuming a product times the number of units consumed
Garbage is scarce because it is abundant
a. True b. False Indicate whether the statement is true or false
As the real wage decreases, the quantity of labor demanded ________ and the quantity of labor supplied ________.
A. increases; increases B. decreases; decreases C. increases; decreases D. decreases; increases