Economics: Principles & Policy
14th Edition
ISBN: 9781337912679
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning US
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Question
Chapter 25, Problem 2DQ
To determine
The economic mechanism involved for non-equilibrium of the economy.
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My friend Marie decides to set aside $200 from her paycheck every month. How will this affect her demand curve? (You don't have to use specific numbers, just explain)
When Marie sets aside money from her paycheck, this is the same thing as a decrease in her income. Remember that when income increases, the demand curve shifts outwards to reflect the increase in spending. In this case, Marie's demand curve will shift inwards as she tries to economize more than usual. She will buy fewer goods, even if the prices don't change. Illustrate in graph
Suppose that when the price of a good rises by 8%, the quantity demanded that good falls by 13%. What is the approximate change in total expenditure (or total revenue)? Express your answer as a percentage.
I got -6% but it is incorrect.
in an economy C is equal to 300+0.5 Y and I= Rs.600 where C is consumption and Y is income calculate (a) equilibrium level of income (b) the consumption expenditure at equilibrium level of an income.
Chapter 25 Solutions
Economics: Principles & Policy
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