Which of the following is necessary for the economy to be in equilibrium?
a. Income must be greater than output.
b. Income must be less than output.
c. Aggregate expenditure must equal output.
d. Aggregate expenditure must equal investment.
c. Aggregate expenditure must equal output.
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Suppose that short-term real interest rates fall in Japan. Is this likely to be good news or bad news for the tourism industry in Hawaii?
What will be an ideal response?
What would best explain why a generally risk-averse person would bet $100 during a night of blackjack in Las Vegas?
A) Risk aversion relates to income choices only, not expenditure choices. B) Risk averse people may gamble under some circumstances. C) The economics of gambling and the economics of income risk are two different things. D) Risk-averse people attach high subjective probabilities to favorable outcomes, even when objective probabilities are known.
The notion of reciprocity means that one nation will impose import restrictions on another in order to:
a. stimulate an increase in trade restrictions in the latter. b. stimulate a decrease in trade restrictions in the latter. c. eliminate trade restrictions immediately in both countries. d. improve the government revenue collections through tariffs in both countries. e. enforce standards of product quality in the latter.
Imposing fines on companies that contribute heavily to air and water pollution is an attempt to bring marginal private costs in line with marginal social costs.
Answer the following statement true (T) or false (F)