If people leave bequests primarily because they are uncertain about the timing of their deaths,
A) the marginal propensity to consume out of a temporary change in income would tend to be higher than in the simple version of the LCH.
B) unrealized capital gains from higher housing prices will probably lead to a higher consumption-to-income ratio than in the simple version of the LCH.
C) increases in wealth from the stock market would be consumed over a longer time horizon than in the simple version of the LCH.
D) A and C are both correct.
C
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Explain how changes in corporate taxes affect the investment decisions of firms
What will be an ideal response?
Which of the following statements regarding accounting and economic profits is FALSE?
A) Economic profits can be zero even if accounting profits are positive. B) Economic profits = total revenue - (explicit + implicit costs) C) Accounting profits can be negative if economic profits are positive. D) Accounting profits = total revenue - explicit costs
If the production of a good creates large spillover benefits on others, the government might correct for the:
a. overallocation of resources to its production by subsidizing it b. overallocation of resources to its production by imposing a tax on it. c. underallocation of resources to its production by subsidizing it. d. underallocation of resources to its production by imposing a tax on it.
Which of the following is excluded in the current account?
A. goods exports B. goods imports C. capital inflow and outflow D. net unilateral transfers