Why is the aggregate expenditure model important to economists?
a. It helps explain fluctuations in the economy that can cause major disruptions.
b. It illuminates methods of fostering long-term growth in the economy.
c. It explains why the economy sometimes produces beyond the natural rate of real output.
d. It aids economic planning by providing a measure of the level of inflation in the economy.
a. It helps explain fluctuations in the economy that can cause major disruptions.
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Use the following information to answer the next question.Maya purchases only three products; orange juice, prepared meals, and on-demand episodes of her favorite shows. Each week she purchases 2 bottles of orange juice, 14 prepared meals, and 8 on-demand episodes. The prices of bottles of orange juice, prepared meals, and on-demand episodes for four different years are shown in the table below.YearPrice of Orange JuicePrice of Prepared MealsPrice of On-Demand Episodes1$2$6$102$6$5$123$4$7$134$4$8$11How much will Maya spend per week in Year 1?
A. $210 B. $178 C. $208 D. $168
Refer to Table 2-2. According to the law of comparative advantage, both Honduras and Nicaragua could gain if
a. Honduras produced all of the apples and oranges and Nicaragua did not produce anything. b. Honduras specialized in producing apples, Nicaragua specialized in producing oranges, and they traded. c. Honduras specialized in producing oranges, Nicaragua specialized in producing apples, and they traded. d. Nicaragua and Honduras were both were self-sufficient and did not trade.
An example of a monopoly is
A) a big city restaurant. B) the stock market. C) the only veterinarian in an isolated farm community. D) a large hospital in a big city.
________ coordinate economic activity in which there are substantial ________
A) Markets; team production efficiencies B) Markets; transactions costs C) Firms; economies of scale D) Firms; principal-agent problems