How can autonomous consumption be greater than zero when income is zero?
What will be an ideal response?
Autonomous consumption is the level of consumption independent of income. People with zero income still consume goods and services such as food, shelter, and medical care. This is possible through the use of savings or credit and is referred to as dissaving.
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Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model? a. The GDP Price Index falls and net nonreserve
international borrowing/lending balance becomes more negative (or less positive). b. The GDP Price Index rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive). c. The GDP Price Index falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative). d. The GDP Price Index and net nonreserve international borrowing/lending balance remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
If a firm has already paid or has agreed to pay for something, we call that cost:
A. a fixed cost. B. a spent cost. C. a sunk cost. D. a lost cost.