Fani Warraich ECONOMICS   -   Microeconomics

Which of the following is an INCORRECT statement about a budget constraint?

Indifference between points on the budget constraint is incorrect; preferences between them can vary based on individual utility.
Fani Warraich ECONOMICS   -   Microeconomics

The concept of opportunity cost is based upon the principle of:

Opportunity cost is based on the concept of scarcity, where choosing one option means forgoing the next best alternative.
Fani Warraich ECONOMICS   -   Microeconomics

The essence of Engel's law is that as family income rise:

Engel's law states that as income increases, the proportion of income spent on food decreases.
Fani Warraich ECONOMICS   -   Microeconomics

The optimal capital stock is achieved when the user cost of capital is equal to:

Optimal capital stock occurs when the marginal product of capital equals the user cost of capital, balancing the costs and benefits of capital.
Fani Warraich ECONOMICS   -   Macroeconomics

The labour measure (L) is:

The labor measure (L) is typically the total number of employed workers multiplied by the average hours worked, reflecting the actual labor input.
Fani Warraich ECONOMICS   -   Macroeconomics

The aggregate production function for the Solow growth model assumes ___________ returns to scale and _____________ marginal productivity of labour and capital.

The Solow model assumes constant returns to scale and diminishing marginal productivity for both labor and capital.
Fani Warraich ECONOMICS   -   Macroeconomics

It is the _______ interest rate that matters for spending decisions and the _______ interest rate that is relevant when we look at monetary questions.

The real interest rate influences spending decisions by reflecting the true cost of borrowing, while nominal rates are used in monetary policy.
Fani Warraich ECONOMICS   -   Macroeconomics

Which kind of demand fluctuates the most?

Private demand for investment is highly volatile due to changes in business expectations, interest rates, and other factors.
Fani Warraich ECONOMICS   -   Macroeconomics

In short-run macroeconomic analysis, demand is often viewed as the driving force. Which component of total demand is often regarded as being independent of economic conditions and thus exogenous in the model?

Government spending and tax receipts are often treated as exogenous in short-run models, as they are determined by policy rather than economic conditions.
Fani Warraich ECONOMICS   -   Macroeconomics

What is not a component of the GDP?

Employment rate is not directly a component of GDP, which measures the total output produced within a country.

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