Evaluating an Unconventional Medium of Exchange
In a small, isolated island economy, large, durable, and difficult-to-counterfeit seashells have been the traditional form of payment for generations. Recently, a new technology allows for the easy 3D printing of identical, but less durable, seashells. Analyze how this technological development would impact the seashells' effectiveness in fulfilling the three primary roles of money.
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In a closed economy with no government, a sudden wave of business optimism leads to a $50 billion increase in planned investment spending. If the marginal propensity to consume is 0.8, what will be the total change in the economy's equilibrium output?
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In a closed economy with no government, a sudden wave of business optimism leads to a $50 billion increase in planned investment spending. If the marginal propensity to consume is 0.8, what will be the total change in the economy's equilibrium output?
In a closed economy with no government, a sudden wave of business optimism leads to a $50 billion increase in planned investment spending. If the marginal propensity to consume is 0.8, what will be the total change in the economy's equilibrium output?
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In a simple economic model, a sudden drop in business confidence causes planned investment to fall by $30 billion. If the marginal propensity to save is 0.2, the total equilibrium output will ultimately decrease by $____ billion.
In a simple economic model, a sudden drop in business confidence causes planned investment to fall by $30 billion. If the marginal propensity to save is 0.2, the total equilibrium output will ultimately decrease by $____ billion.
In a simple, closed economy with no government, a technological breakthrough causes a wave of optimism among firms, leading to a total increase in equilibrium output of $500 billion. If the marginal propensity to consume in this economy is 0.8, what was the initial autonomous increase in investment spending that sparked this economic expansion?
In a small, isolated community, several items are used in trade. Freshly caught fish are often exchanged for other foods but must be consumed within a day. Unique, handcrafted sculptures are highly valued and held as family treasures, but rarely traded. Iron nails, which are durable and uniform, are frequently traded, but their value fluctuates wildly depending on the arrival of supply ships. Finally, seashells of a specific type are consistently accepted by everyone in exchange for any good or service, and all items in the local market have their prices listed in number of shells. Which of these items best fulfills the primary roles of money in this community?
Evaluating an Unconventional Medium of Exchange
In two closed economies, A and B, with no government sector, a new technology causes autonomous investment to increase by the same amount in both. If households in Economy A tend to save a larger portion of any new income than households in Economy B, then the final increase in total output will be greater in Economy A.
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In a simple, closed economy with no government, a technological breakthrough causes a wave of optimism among firms, leading to a total increase in equilibrium output of $500 billion. If the marginal propensity to consume in this economy is 0.8, what was the initial autonomous increase in investment spending that sparked this economic expansion?