What is shown by the budget line in a two-product (A and B) case? Describe what happens when there is a change in income or the price of a product
Please provide the best answer for the statement.
A budget line shows various combinations of two products which can be purchased with a given money income of a consumer and given the prices of the two products. A decrease in the money income of a consumer shifts the budget line inward to the origin. An increase in the money income of a consumer shifts the budget line outward from the origin. Price changes in either of the two products will rotate the budget line along one axis. Assume that the quantity of product A is shown on the vertical axis. If the price of A rises, less of A will be purchased at each of the possible combinations of A and B, so the budget line will shift downward along the vertical A axis towards the origin. A decrease in the price of A would have the curve shift upward along the A axis away from the origin.
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When a government must operate on a balanced budget, it means that there is no ________ or ________
A) unemployment; special taxes B) surplus; deficit C) bonds being issued; purchased D) borrowing; printing of money
The role of the costs of capital is influenced by the degree to which firms can substitute capital for other inputs of production known as relative prices
Indicate whether the statement is true or false
Central banks get the purchasing power to buy foreign exchange by:
a. Buying government securities. b. Reducing currency in circulation. c. Increasing their liabilities in the form of deposits from banks. d. Taking loans from the government.
Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The opportunity cost to Henry of making a bird house is 1/3 bird feeder
a. True b. False Indicate whether the statement is true or false