Country X and Country Y are two neighboring countries which are experiencing recession. The government of Country X reduced its expenditure during the recession while Country Y's government increased the supply of money in the economy
Which of the two policies will help the economy to recover from the recession?
Aggregate demand falls during a recession. This reduces production and demand for labor leading to a sharp increase in unemployment, lowering private expenditure further. If the government also reduces its expenditure during a recession, production will fall even more leading to more job losses. On the other hand, if the central bank increases the supply of money, the aggregate price level will increase. An increase in output prices will lead to an increase in production. As a result, firms will hire more workers. Thus, the policy adopted by the government of Country Y is a better policy.
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Joe's income is $500, the price of food (F, y-axis) is $2 per unit, and the price of shelter (S, x-axis) 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.
The amount of a product that people are willing and able to purchase at a specific price is referred to as the:
a. demand. b. quantity demanded. c. law of demand. d. consumption function. e. purchasing power.
If the market price is $5 and you are currently producing at a level where average total cost is $3 and falling, you should
a. b or c, it doesn't matter b. shut down c. produce only enough to cover variable costs d. produce where MR = MC e. produce until the average total cost and average revenue are equal
If the cost of producing butter increases, what will happen to the equilibrium price and quantity of butter exchanged?Price Quantity
a. Decrease Increase b. Decrease Decrease c. Increase Decrease d. Increase Increase