The real balances effect is caused by an inverse relationship between the price level and the real value of financial assets with fixed nominal value
a. True
b. False
Indicate whether the statement is true or false
True
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If consumers experience an decrease in lifetime income, current spending will ________, current saving will ________, and future spending will ________
A) decrease; decrease; decrease B) increase; decrease; decrease C) increase; decrease; increase D) increase; increase; decrease E) decrease; increase; increase
In bargaining between a bureau and the legislature over a budget, the legislature decides to purchase a certain amount of output at certain price and negotiates both simultaneously. This gives the bureau the opportunity to _____
a. minimize their effort b. extract all the legislature's consumer surplus from the bureau's output c. maximize the bureau's profits d. maximize the budget's producer surplus by extracting from the legislature large rents
Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hangar that he could have rented out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an
airplane for $6,000 . pays $1,300 for fuel and maintenance, and hires one worker for $30,000 . Sam's total revenue from pilot training classes this year equaled $90,400 . How did Sam's business do this year? a. Sam realized an economic profit of $3,400 this year. b. Sam realized an economic loss of $3,400 this year. c. Sam realized an economic profit of $5,800 this year. d. Sam realized an economic profit of $3,800 this year. e. Sam realized an economic loss of $3,800 this year.
Whenever there are negative or positive externalities, the Coase theorem suggests that it is economically efficient for the government to intervene to resolve the externality problem.
Answer the following statement true (T) or false (F)