With a consumption function of the form C = a + bYD, which of the following would best measure how much a recession will spread?
A. 1 ÷ (1 - b).
B. Parameter a.
C. Parameter b.
D. Variable YD.
Answer: A
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When leisure is an inferior good, the wage elasticity of labor supply is always positive.
Answer the following statement true (T) or false (F)
Which of the following explains why purchasing power parity does not completely explain long-run fluctuations in exchange rates?
A) Most countries do not impose barriers to trade. B) Some goods and services produced in any country are not traded internationally. C) Consumer preferences for goods and services across countries are very similar. D) Most countries have free markets with little, if any, government regulation.
Producers and consumers drive the economy of a
a. Communist economic system b. market economic system c. command economic system d. traditional economic system
When higher taxes discourage whatever activity is being taxed, that is called
A. a multiplier effect. B. tax discouragement. C. a negative incentive effect. D. tax abatement.