Political business cycles which are the results of economic fluctuations that occur when discretionary policy is manipulated for political gain
Indicate whether the statement is true or false
true
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Your drink budget is entirely split between bottled water and fancy liqueurs, and your tastes are quasilinear in bottled water. In an attempt to get people to drink more water, the government introduces a subsidy that lowers the price of bottled water.
a. In a graph with bottled water on the horizontal and fancy liqueurs on the vertical axis, illustrate your before-subsidy budget and your optimal bundle A. b. As a result of the water subsidy, I notice you consume more fancy liqueur. Illustrate this in your graph using income and substitution effects. c. You and I are good friends, in part because I confided in you some time ago that I, too, have tastes that are quasilinear in water. (Nothing bonds like quasilinearity!) But, after the subsidy is introduced, you observe that I, unlike you, have reduced my consumption of fancy liqueurs. Your other friends claim that this is proof that our friendship is based on a fiction --- that I cannot possibly also have quasilinear tastes. Illustrate in a graph why your friends are wrong. d. If we both have quasilinear tastes, can you explain what the fundamental difference in our tastes is that accounts for the difference in behavior? What will be an ideal response?
Which of the following is NOT a form of e-money?
A) a debit card B) a credit card C) a stored-value card D) a smart card
Which of the following is true regarding value, transaction costs, and exchange?
a. Middlemen can be viewed as agents who create value by reducing transaction costs and, thereby, facilitating gains from exchange. b. Middlemen fail to create value since they do not expand the supply of physical goods. c. A good or service has a given value regardless of who uses it or how it is used. d. Voluntary exchange reduces value by channeling goods into the hands of people who value them least.
The use of the coordinate system allows
a. for the display of the flows of dollars, goods and services, and factors of production in an economic system. b. for the display of how labor and other resources are organized in the production process. c. for the display of two variables on a single graph. d. for the creation of pie charts and bar graphs.