Refer to the above figure. Autonomous consumption equals
A. $5000.
B. -$5000.
C. 0.
D. $25,000.
Answer: A
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Isabella decides to buy a dress that Olivia has for sale; they agree on a price of $20 . Which of the following best describes who gains and who loses from the transaction?
a. If the dress originally costs more than $20, Isabella gains and Olivia loses. b. If the dress originally costs less than $20, Olivia gains and Isabella loses. c. Both parties expect to gain from this transaction. d. If Olivia gains from the transaction, Isabella must lose an equal amount.
You live in a world where the marginal rate of substitution of food for clothing is two and the price ratio between food and clothing is one. Your world also has labor and capital that has marginal products respectively of two and five. The price of capital is ten and the price of labor is 8. Finally, your world can transform two units of food into one unit of clothing or vice versa. Assuming that all the conditions of general equilibrium are present, what will happen in the various sectors of the economy to bring about general equilibrium?
What will be an ideal response?
Refer to Figure 18-1. The appreciation of the euro is represented as a movement from
A) A to B. B) D to A. C) A to C. D) B to C. E) D to C.
Assuming an inflationary gap exists, classical economists believe that flexible wages will restore full employment
a. True b. False Indicate whether the statement is true or false