Indicate whether each of the following statement is True or False. g) A household purchase of...

Indicate whether each of the following statement is True or False.

g) A household purchase of new housing constitutes investment expenditure.

h) The larger the marginal propensity to consume the smaller the multiplier.

i) Higher consumer confidence in the economy causes a downward movement along aggregate

demand curve.

j) The higher the interest elasticity of investment the flatter the IS curve.

k) The lower the interest sensitivity of money demand the steeper the LM curve.

l) To rescue a country’s currency from depreciating under fixed exchange rate practice, the

central bank must sell its reserve

Solutions

Expert Solution

g) False

Investment expenditure is the expense in the means of production or capital which is futher used to prodcue goods and services. A house is hardly used to produce anything and is considered final product which consumers consume for living.Hence it is a consumption expenditure and not investment expenditure.

h) False

The size of multiplier is determined by marginal propensity to consume. Both marginal propensity to consume and multiplier are directly related. In short,higher the MPC,greater will be multiplier effect and vice versa.

i) False

An increase in consumers confidence in the economy brings about an increase in the aggregrate demand curve i.e. it causes a rightward shift in the AD curve while if consumers lose confidence in the economy,cause decrease AD curve i.e. shifts leftward.

j) True

The slope of IS curve depends upon a key parameter which is interst elasticity of investment.The higher will be the interst elasticity of investment,it will increase the confidence of consumers in the economy nd this will be make IS curve flatter.

k) True

The steepness of LM curve depends upon the sensitivity of investment spending. If investment spending is sensitive to change in the interest rate flatter will be the curve while if investment spending is insensitive to change in the interest rate,steeper will be the LM curve.

Rahul Sunny answered 1 month ago

Next > < Previous

Related Solutions

True/False: Indicate whether the following statement is true or false. If it is false, indicate the...

True/False: Indicate whether the following statement is true or false. If it is false, indicate the reason. If it is true, indicate what makes it true. Just stating true or false will not earn any points. "It is not possible to have concave preferences."

For each of the following, indicate whether the statement is true or false and include a...

For each of the following, indicate whether the statement is true or false and include a brief explanation for your answer. a.A pension trust fund appears in the government-wide financial statements but not in the fund financial statements. b.Permanent funds are included as one of the governmental funds. c.A fire department placed orders of $20,000 for equipment. The equipment is received but at a cost of $20,800. In compliance with requirements for fund financial statements, an encumbrance of $20,000 was...

For each of the following, indicate whether the statement is true or false and include a...

True/false/ambiguous. For each of the following, indicate whether the statement is true, false, or ambiguous, and...

True/false/ambiguous. For each of the following, indicate whether the statement is true, false, or ambiguous, and briefly explain your answer. If your answer depends on any assumptions, state them clearly. Use graphs or equations to illustrate your answer whenever it is helpful. 1. A worker should never trust an implicit contract with an employer that pays them less than their marginal product when they first join the firm, but more than their marginal product after many years with the firm,...

True/false/ambiguous. For each of the following, indicate whether the statement is true, false, or ambiguous, and...

True/false/ambiguous. For each of the following, indicate whether the statement is true, false, or ambiguous, and briefly explain your answer. If your answer depends on any assumptions, state them clearly. Use graphs or equations to illustrate your answer whenever it is helpful. 11. In efficiency wage models, employers take the market wage as given, and then choose the level of effort at which employees are required to work. 12. Mandatory retirement only makes sense in a delayed compensation (or underpayment-overpayment)...

Read each of the following statements, and indicate whether each statement is true or false. A:...

Read each of the following statements, and indicate whether each statement is true or false. A: Firms will raise all the common equity they can from retained earnings before issuing new common stock, because capital from retained earnings is less expensive than capital raised from issuing new common stock. B: The flotation costs associated with the sale of debt securities are greater than those associated with new common stock issues C: Firms raise capital from retained earnings only when they...

3. Indicate whether each of the following statement is true or false and why: a. Product...

3. Indicate whether each of the following statement is true or false and why: a. Product standard cost data are often utilized by managers and analysts in departments other than the accounting department. b. Standard cost accounting systems are expensive to operate. c. Wage rate variance information is less useful to a production manager than labor efficiency variance information. d. When standards cost are set tight and inventories are growing, a standard cost accounting systems tends to report lower operating...

True or False. Indicate whether the statement is true or false. If false, explain in the...

True or False. Indicate whether the statement is true or false. If false, explain in the space provided the statement why it is false, or simply correct the statement. Smooth muscle contraction is regulated by the autonomic nervous system. During exercise, the sympathetic nerves that innervate the smooth muscles of bronchioles and arterioles regulate the contraction of these smooth muscles to increase ventilation and cardiac output. 2. Multiple choice: Choose one best statement. An infant born prematurely has neonatal respiratory...

Indicate whether each of the following statements is true or false. If false, indicate how to...

Indicate whether each of the following statements is true or false. If false, indicate how to correct the statement. a. The amount reported for accumulated other comprehensive income (AOCI) on the balance sheet must be a positive amount consistent with all other stockholders’ equity accounts. b. Changes in AOCI are reflected in other comprehensive income, which is different from net income. c. Other comprehensive income does not imply a change in cash.

True/False (3 pts each) Indicate whether the statement is true or false. If true, explain why...

True/False (3 pts each) Indicate whether the statement is true or false. If true, explain why it is true and/or give examples to support it. If false, explain why it is false. 2.An increase in plasma osmolality will cause more secretion of ADH.

Subjects