If food is on the vertical axis and shelter on the horizontal axis, then the equation for the budget line can be expressed as

A. M/Ps = S.
B. PsS + PfF = M.
C. PsS + PfM = S.
D. PsF + PfS = M.


Answer: B

Economics

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When negative externalities exist in a market, if the producers are forced to pay a Pigouvian tax then:

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Indicate whether the statement is true or false

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Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?

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Economics