Which factors will cause the consumption function to shift? Which factors do not cause the function to shift?
The principal factors that will cause the consumption function to shift are: changes in wealth; changes in the price level; and changes in consumer expectations. If wealth increases, then more consumption is possible at the same level of income. If the price level changes, fixed money assets change in value. When prices rise, fixed money assets decrease in value and consumption will decrease. As consumers become more optimistic, they will tend to spend more even if their current income is not changing. The only factor that will not shift the consumption function is disposable income. When disposable income changes, you move up or down a consumption function depending on the direction of change. If disposable income increases, then one moves up along the consumption function.
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Answer the following statement(s) true (T) or false (F)
1. When a Clarke tax is used, the revenue collected may or may not cover the cost of providing the public good. 2. One problem with a Clarke tax is that although it may not cover the complete cost of a public good, it will never generate more than the cost of the good. 3. Social costs are equal to the costs imposed on others. 4. Social costs are felt by consumers but not by manufacturers. 5. All cars contribute positively to social gains.
The process of converting a future amount of money into its value today is called
A) trending. B) depreciation. C) discounting. D) compounding.
College graduation rates and college attendance rates are equally strongly correlated with family income
Indicate whether the statement is true or false
Suppose that when the price of broccoli is $4 per pound, buyers wish to buy 500 pounds per day and sellers wish to sell 800 pounds per day. In this case:
A. excess supply will lead the price of broccoli to fall. B. excess demand will lead the price of broccoli to rise. C. excess demand will lead the price of broccoli to fall. D. excess supply will lead the price of broccoli to rise.