Which of the following most completely describes the workings of the aggregate expenditures model?
a. If aggregate expenditures are less than aggregate output, then there is unplanned inventory accumulation, and real GDP will decrease.
b. If aggregate expenditures are greater than aggregate output, then there is unplanned inventory depletion, and real GDP will increase.
c. Aggregate output generates an equal amount of aggregate spending.
d. Both a. and b. above are correct.
d
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Joe's income is $500, the price of food (F) is $2 per unit, and the price of shelter (S) is $100. Which of the following represents his budget constraint?
A) 500 = 2F + 100S B) F = 250 - 50S C) S = 5 - .02F D) All of the above
Refer to Table 2.1. You can spend $40 on going to the movies or eating at a restaurant, or both. What is the opportunity cost of spending all your money at the restaurant?
Table 2.1 Item A B C D E Movie $0 $10 $20 $30 $40 Restaurant $40 $30 $20 $10 $0 a. $0 b. $10 c. $20 d. $30 e. $40
Which of the following is likely to happen during a boom?
A) The Fed will increase the federal funds rate. B) The Fed will lower the federal funds rate. C) The Fed will increase the supply of money. D) The Fed will lower the reserve requirement.
Assume that yields on bonds (rate of return) begin to fall while the stock market is booming, what should we see happen to the demand and price of stocks and why?
What can we say about the opportunity cost of holding on to bonds in this situation?