All quasilinear goods are necessities.
Answer the following statement true (T) or false (F)
True
Rationale: Consumption of quasilinear goods does not depend on income --- which means that, as income increases, consumption does not change. Necessities are goods whose consumption increases by less than the percentage increase in income, which is true if consumption does not change at all with income.
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Suppose that the interest rate available to you on a long-term bond is 4 percent. If you hold $1,000 of your wealth in currency instead of in the form of a bond, the annual opportunity cost is
A) $0.04. B) $4. C) $40. D) $400.
Based on the information in the above table, what is the unemployment rate? What is the labor force participation rate?
What will be an ideal response?
We collapse the consumer's current-period and future-period budget constraints into a single lifetime budget constraint by
A) assuming no default. B) substituting for savings. C) eliminating consumption smoothing. D) assuming the consumer knows the future.