What role does money play in the circular flow model?
Answer: Money is the medium of exchange that is recognized by both consumers and producers.
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Which of the following describes how a negative externality affects a competitive market?
A) The externality causes a difference between the private cost of production and the private benefit from consumption. B) The externality causes consumer surplus to exceed producer surplus. C) The externality causes a difference between the private cost of production and the equilibrium price. D) The externality causes a difference between the private cost of production and the social cost.
If the businesses last forever, then the Nash Equilibrium is
a. for one firm to charge a HP forever b. for your firm charge a LP when the other firm does c. for each firm to charge HP until the rival does, and then to charge a LP forever. d. for each firm to charge LP until the rival does, and then to charge a HP forever.
When total production is greater than total expenditures, __________ is produced than households want to buy, which leads to __________ in inventory, which signals firms that they have __________, which causes firms to cut back production
A) less; decreases; underproduced B) less; increases; overproduced C) more; decreases; underproduced D) more; increases; overproduced
Automatic stabilizers result in _____ fluctuations in aggregate demand for given changes in spending than would be the case for an economy in which automatic stabilizers did not exist.
A. greater B. more severe C. smaller D. the same