Explain whether you agree with the following statement: Some economists claim that the recession of 2007 - 2009 was caused by a decline in spending on residential construction. This can't be true. If there had just been a decline in spending on residential construction, the only firms hurt would have been home builders and firms selling lumber and other goods used in building houses. In fact, many firms experienced falling sales during that recession, including automobile, appliance, and furniture firms.
A. I agree - the decline in spending on residential construction can't be the cause of the recession
B. I disagree - the commentator assumes that the multiplier is greater than zero
C. I disagree - the commentator ignores the additional rounds of spending that make up the multiplier process
Answer: C. I disagree - the commentator ignores the additional rounds of spending that make up the multiplier process
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See Scenario 4.5. As the price of grilled cheese sandwiches decreases, the price elasticity of demand:
A) increases. B) does not change. C) decreases. D) none of the above
When a national security crisis forces the government to draft workers, this often results in price increases because the supply curves of most goods shift to the left. The people who suffer the price-increase consequences mostly are
a. those who are drafted b. farm goods suppliers because they have less to supply c. consumers of farm goods because farm goods are basic goods d. the rich because they can afford to pay the higher prices, but they pay substantially more e. the poor because they are priced out of the markets
When there is a change in one market, _______________ are effected
Fill in the blank(s) with the appropriate word(s).
For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is:
A. $4. B. $0. C. $0.25. D. $6.