In the circular flow of income model injections:
a) Are assumed to be exogeneous (independent of national income)
b) Are assumed to be a function of national income
c) Decrease aggregate demand
d) Decrease the investment into an economy
Answer: a) Are assumed to be exogeneous (independent of national income)
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Ron regularly deposits $200 each week into a savings account, which earns 3% interest per year. This month he decides instead to invest $200 into the stock market. What is the opportunity cost of Ron's decision to invest rather than save?
A) $200 B) The 3% interest he could have earned by depositing another $200 into his savings account C) The difference between the rate of return he enjoys in the stock market and the 3% interest return he could have earned by depositing that $200 into his savings account D) Zero, because Ron already had the $200
Assume a change in price causes the price elasticity of demand for a good (in absolute value) and marginal revenue to decrease. In this case we can conclude that the price of the good was:
A) increased. B) held constant. C) decreased. D) cannot be determined.