What type of consumer goods is more affected by the business cycle: durable goods or nondurable goods? Why?
What will be an ideal response?
Some workers lose income during a recession and cut back on their spending. Other workers fear losing their jobs or may suffer wage cuts. These workers also reduce their spending. When they cut back on their spending, workers are more likely to cut back on consumer durable goods. Consumer durable goods such as automobiles, appliances, and furniture are goods that are expected to last for three or more years. Since these goods last three or more years, the consumer can continue to use these goods for some time. The consumer will put off trying to replace these expensive goods, until his/her income position is stronger and job security more assured.
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Answer the following statement(s) true (T) or false (F)
1. A market price contains no more information about a good than a good social planner would be able to obtain. 2. According to F.A. Hayek, knowledge is lost as statistics are used to convey information. 3. Whether a good is distributed by a social planner or a market system, the area beneath the demand curve out to the quantity available accurately measures the value consumers receive. 4. When allocation decision are not made on the basis of price traditional methods of social gain understate the actual gain to society.
Money includes
A) currency. B) checking deposits held by households and firms. C) deposits in the foreign exchange markets. D) currency and checking deposits held by households and firms. E) futures and deposits in the foreign exchange market.
If Dana can paint his house faster than Luke, a professional house painter, then:
A. Dana has a comparative advantage in house painting. B. Dana has an absolute advantage in house painting. C. Luke has a comparative advantage in house painting. D. Luke has an absolute advantage in house painting.
What are nontariff barriers (NTBs)? Discuss any three forms of NTBs other than quotas and voluntary export restraints (VERs).
What will be an ideal response?