Briefly explain why a jacket is a private good.
What will be an ideal response?
A private good such as a jacket has two critical properties: it is rival and excludable. First, a jacket is rival in consumption because if one person wears a particular jacket, nobody else can be wearing the same jacket. Second, a jacket is excludable. It is easy to keep someone from wearing your jacket by not giving it to him or by locking it up in your house.
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Based on the data in the table above, what does GDP equal?
A) $8,900 billion B) $10,200 billion C) $9,800 billion D) $10,400 billion E) $10,000 billion
Which of the following is true? a. When real interest rates are higher in country A than country B there will tend to be a capital flow from country B to country A. b. When real interest rates are higher in country A than country B there will tend to be a capital flow from country A to country B. c. Capital flows will tend to increase real interest rates in countries with a capital inflow
d. Both b. and c. are correct.
Which of the following is true of the consumption function? a. It becomes steeper as the income tax rate decreases
b. It becomes flatter as the income tax rate decreases. c. It shifts upward as the marginal propensity to save increases. d. It shifts downward as the expected future income increases.
The theory of liquidity preference is most helpful in understanding
a. the wealth effect. b. the exchange-rate effect. c. the interest-rate effect. d. misperceptions theory.