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- explain the difference between intermediate goods and final goods and give an example of each.Use a diagram to explain the three main characteristics of the consumptionfunction.If the ratio of consumption C to income Y is c, then the ratio of income to consumption is: a. 1/(1+c) b. 1-c c. 1/c d. 1/(1-c)
- Give an economic relationship in which individual effect of independent variables are difficult to separate in the presence of multicollinearity.A changing-basket price index (Passche index) like the GDP deflator tends to:a. underestimate the change in the cost of living because it does not take into account that people can substitute less-expensive goods for ones that become more expensive.b. overestimate the change in the cost of living because the continual introduction of new goods makes consumers better off even if prices do not fall.c. underestimate the change in the cost of living because it does not reflect the reduction in consumers’ welfare that may result from the substitutions of less expensive goods for more expensive ones.d. overestimate the change in the cost of living because it takes into account that people can substitute less expensive goods for more expensive ones.Why isn't the answer b? How is the figure on the right fixed when it fluctuates?
- What does it mean when talking about full income and price when considering the household consumption model?Variables expressed in terms of ...... are called ...... variables a) physical units / endogenous b) exogenous units / real c) money / nominal d) phsical units / real e) endogenous units / nominalGinting likes both orange juice and apple juice. He consumes nothing else. The consumption bundle where Ginting consumes XA bottles of orange juice per year and XB bottles of apple juice per year is written as (XA, XB). Last year, Ginting consumed 28 bottles of orange juice and 7 bottles of apple juice. Ginting is indifferent between (XA, XB) and (28,7) is the set of all bundles such that XB = 196/XA. The set of bundles (XA, XB) such that Ginting is just indifferent between (XA, XB) and the bundle (14, 21) is the set of bundles such that XB = 294/XA. A. Identify on the graph several points that lie on the indifference curve that passes through the point (28, 7), and sketch this curve, using blue ink. Do the same, using red ink, for the indifference curve passing through the point (14, 21). B. Use grey ink to shade in the set of commodity bundles that Ginting weakly prefers to the bundle (28, 7). Use blue ink to shade in the set of commodity bundles such that Ginting weakly prefers (14,…
- If an economic curve has a negative slope, then one variable _______falls as the other rises.has a smaller value than another variable.changes after another variable.changes at a slower rate than another.What determines the slope of a consumption function?Which one of the following is NOT a possible relationship between income and spending Select one: a. Income equals the level of spending b. Spending is higher than income c. None is a relationship d. Income is higher than spending
