Refer to Figure 21-1. Which of the following is consistent with the graph depicted above?
A) Households become spendthrifts and begin to save less.
B) An expected recession decreases the profitability of new investment.
C) The government runs a budget surplus.
D) Technological change increases the profitability of new investment.
Figure 21-2
D
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What do economists call the factor payments that go to capital?
a. wages b. rent c. interest d. deposits
Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Brandon's risk premium is:
A. 66.31 units of water. B. 0.19 units of water. C. 33.16 units of water. D. 3.20 units of water.
Which of the following explains economics as it should be?
a. microeconomics b. ideal economics c. delusional economics d. normative economics
Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?
A. Real GDP will decrease by $8 billion. B. Real GDP will decrease by $10 billion. C. Real GDP will decrease by $40 billion. D. Real GDP will decrease by $50 billion.