Which of the following illustrates how the investment accelerator works?
a. An increase in government expenditures increases the interest rate so that the Burgerville chain of restaurants decides to build fewer new restaurants.
b. An increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants.
c. An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Burgerville increases.
d. An increase in government expenditures decreases the interest rate so that Burgerville decides to build more new restaurants.
b
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In perfectly competitive markets with identical firms, the burden of a tax is shared by consumers and producers in the short run so long as market demand is not perfectly elastic.
Answer the following statement true (T) or false (F)
Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 400 and WR = 100 and the probability of drought is 0.75. Brandon's risk premium is:
A. 250 units of water. B. 325 units of water. C. 17.5 units of water. D. 18.75 units of water.
A.P. Lerner believes that society maximizes its total utility when income distribution is
a. perfectly equal, assuming individual utility functions are different b. perfectly equal, assuming individual utility functions are the same c. perfectly unequal, assuming individual utility functions are the same d. perfectly unequal, assuming individual utility functions are different e. whatever the market dictates because individual utility functions are different
Most studies have found that tobacco and marijuana are substitutes rather than complements
a. True b. False Indicate whether the statement is true or false