The two components of a consumption curve are induced consumption and
a. permanent consumption
b. transitory consumption
c. durable consumption
d. autonomous consumption
e. external consumption
D
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An externality is an example of a market failure
Indicate whether the statement is true or false
If the economy suffers a permanent negative supply shock because there is an increase in regulations that permanently reduce the level of potential output, then
A) potential output falls. B) the long-run aggregate supply curve shifts leftward. C) the short-run aggregate supply curve shifts upward. D) all of the above.
A theory is an explanation of the causal mechanism behind observed phenomena
a. True b. False Indicate whether the statement is true or false
The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year.
With the opportunity to trade Silvia and Art can ________ the maximum consumption of computers by ________ units.
A. decrease; 160 B. decrease; 80 C. increase; 40 D. increase; 160