What is the difference between induced and autonomous expenditure? Which components of aggregate expenditure fall under which category?
What will be an ideal response?
Induced expenditure is expenditure that depends on the level of real GDP, so that when real GDP changes, induced expenditure changes. Autonomous expenditure is independent of the level of real GDP, so that when real GDP changes, autonomous expenditure does not change. Consumption expenditure includes elements of both autonomous and induced expenditure. So, too, do imports. However, investment, government expenditure on goods and services, and exports are all autonomous expenditure.
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Alice and Gene work in the mailroom, sorting and delivering mail. In order for them to benefit from specialization and trade, Alice must
A) be able to both sort and deliver faster than Gene. B) be equally productive in both sorting and delivering. C) have a comparative advantage in both sorting and delivering. D) have a comparative advantage in one task and Gene must have a comparative advantage in the other task. E) be equally productive as Gene in both sorting and delivering.
Suppose that the Japanese yen appreciates significantly at some point, thus making Japanese imports more expensive. Japanese exporters may lower their profit margins to reduce the effect of the yen appreciation on U.S
importers, producing a phenomenon known as A) the J-curve. B) the absorption effect. C) pricing to market. D) international reserves compliance.
Productivity increases, brought about by increased education and training, may shift the aggregate supply curve outward
a. True b. False Indicate whether the statement is true or false
Dead capital is
A. useful only if employed in a labor-intensive production process. B. unlikely to have any productive use. C. useful only if employed in a capital-intensive production process. D. unlikely to be applied to its most efficient use.