Why does investment spending rise and fall with the overall level of GDP in the economy?
What will be an ideal response?
If firms believe that GDP will continue to increase into the future, they may want to invest in anticipation of high future demand for their products. Similarly, if GDP falls and firms believe that this will continue into the future, they are less likely to invest, as their expectation of the future seems less lucrative.
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One advantage of a money market mutual fund account is that: a. it is guaranteed for a larger amount than are FDIC-insured deposits
b. it is a riskless asset. c. its holders typically earn more interest than they can with a regular bank account. d. it earns high interest and is liquid. e. it is completely liquid and riskless.
Which economic policy would a government adopt in order to maximize net social welfare?
a. Increasing taxes on commodities with a relatively low elasticity of supply b. Increasing subsidies on commodities with a relatively high elasticity of demand c. Reducing subsidies on commodities with a relatively low elasticity of demand d. Reducing taxes on commodities with a relatively high elasticity of supply
This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.According to the figure shown, Starbucks:
A. has first-mover advantage. B. should wait to see what Dunkin Donuts is going to do. C. has a dominant strategy not to expand. D. has a dominant strategy to expand.
How does a natural monopoly function?
a) A few firms are in perfect competition b) Imperfect competition makes it difficult for firms to do business c) a single firm supplies all the output d) The government supplies all buyers with the product