What are the voting rules followed by the political system as opposed to the market system?
What will be an ideal response?
In the political system, one person gets one vote, while in the market system, each one dollar that a consumer spends counts separately. The political system is run by majority rule, while the market system is run by proportional rule. In the market system, the spending of dollars indicate intensity of want, while this is not the case in the political system due to its all-or-nothing nature.
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Studies show that the income elasticity of demand for wine is approximately five. What does this mean?
A) A 1 percent increase in income leads to a 5 percent increase in wine consumption. B) A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption. C) A 5 percent increase in income leads to a 1 percent increase in wine consumption. D) Wine is a relatively elastic good.
What is the multiplier? If MPC =0.75, what is the value of the multiplier in the simple model of the economy?
What will be an ideal response?
The price of apples falls. What happens in the market for apple pies?
A) The equilibrium price falls, and the equilibrium quantity rises. B) The equilibrium price rises, and the equilibrium quantity falls. C) The equilibrium price and quantity rise. D) The equilibrium price and quantity fall.
As overseas leakage becomes greater, the multiplier effect
A. shrinks. B. grows. C. becomes more moderate. D. is replaced with the incentive effect.