Mikey likes bagels, so he buys an old pizza shop for $150,000 and spends $10,000 installing new equipment which will allow him to make bagels instead of pizza. How will Mikey's recent purchases affect GDP?
A. Investment will increase $160,000.
B. Investment will increase $150,000, and consumption will increase $10,000.
C. Consumption will increase $150,000, and investment will increase $10,000.
D. Investment will increase $10,000.
D. Investment will increase $10,000.
Economics
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In the absence of a financial system, the two-period model without taxes predicts that
A) consumption is more volatile that output. B) consumption is as volatile as output. C) consumption is less volatile than output. D) We do not know.
Economics
Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is
A) less than $5. B) at least $95. C) at least $100. D) $105.
Economics