Autonomous consumption is defined as
A. the level of real consumption spending that is independent of real disposable income.
B. the real consumption spending by the autonomous government.
C. the consumption of foreign-made goods independent of exchange rates.
D. the level of real consumption spending that is equal to real disposable income.
Answer: A
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Refer to Table 5.1. Hector has a comparative advantage in the production of
A) bracelets. B) tiaras. C) both products. D) neither product.
A shadow price is a
a. price the producer will accept, rather than the price the producer tries to get b. price used by a planner to make a non-profitable project appear profitable c. disequilibrium price d. price that would exist in the absence of all market distortions e. none of the above
The consumption function has a slope less than one because:
a. as disposable income increases, the real rate of interest will decline. b. saving and consumption are equal at all levels of income. c. as disposable income increases, consumption expenditures increase by an amount less than the increase in income. d. as disposable income increases, consumption expenditures increase by an amount greater than the increase in income.
Elasticity
a. deals with percentage changes in price and quantity demanded. b. employs percentage changes calculated in terms of average values of the prices and quantities at issue. c. is generally stated in absolute value. d. All of the above are correct.