Because saving is a leakage, sudden additional saving results in higher equilibrium income for society, ceteris paribus.
Answer the following statement true (T) or false (F)
False
Additional saving actually leads to lower equilibrium income because saving is not spent and therefore creates no immediate income. This is sometimes called the paradox of thrift.
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Refer to the scenario above. Which of the following problems is most likely to arise in this case?
A) Adverse selection B) Moral hazard C) The tragedy of the commons D) The free-rider problem
If the wage rate were $90, how many workers would be hired?
The lowest elasticity in the above graph would be at point _____.
A. A
B. B
C. C
D. E