Refer to the information provided in Table 22.2 below to answer the question(s) that follow. Table 22.2 PointAggregate Income (Y)Aggregate Consumption (C) A 10 14 B 20 23 C 30 25 D 40 26 E 50 34 F 60 39The data in the table was used to estimate the following consumption function: C = 12 + 0.4YRefer to Table 22.2. The error for point E is equal to
A. -2.
B. -1.
C. +2.
D. +4.
Answer: A
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Production possibilities frontiers usually curve out and away from the origin. The implication is
A) that as resources are used to produce one good, fewer resources are available to produce another good. B) that the opportunity cost of producing a good goes down as more of that good is produced. C) technological change is present. D) that the opportunity cost of producing a good stays the same regardless of how much of that good is produced. E) some resources are better at producing one good while other resources are better at producing alternative goods.
During the Great Depression, as real interest rates rose, good credit risks were less likely to seek loans. This process illustrates the phenomenon of ________
A) adverse selection B) moral hazard C) poor monetary policy D) debt deflation
The demand curve for a normal good will:
A. slope downward only if the income effect dominates the substitution effect. B. slope downward only if the substitution effect dominates the income effect. C. slope downward. D. slope upward if the good is also a Giffen good.
In long-run equilibrium, compared to a perfectly competitive market, a monopolistically competitive industry produces a ________ level of output and charges a ________ price
A) higher; lower B) lower; lower C) lower; higher D) higher; higher