Answer:
a. 62.5
b. 60%
c. $160,000; $352,000
Explanation:
a. Price Index = (Price in year of interest/ Price in Base year) * 100
= (10/16) * 100
= 62.5
b. Rose from 62.5 in 1984 to 100 in 2005
= (100 - 62.5)/62.5
= 60%
c. Using 2005 as the Base year means that the Real GDP will be based on 2005 prices.
Real GDP 1984
= 10,000 buckets * 16
= $160,000
Real GDP 2005
= 22,000 * 16
= $352,000
B) Fiscal policy requires a short and contentious legislative process
Joe should decrease his consumption of crackers and his marginal utility from crackers will increase and also increase his consumption of cheese and his marginal utility from cheese will decrease .
<h3>What happens to marginal utility when consumption decreases?</h3>
According to the Law of Diminishing Marginal Utility, the additional utility derived from increasing consumption declines with each additional increase in consumption level.
What happens to marginal utility when consumption increases?
According to the law of declining marginal utility, when consumption rises, the marginal utility gained from each extra unit decreases, all other things being equal.
Why does marginal utility decrease as more is consumed?
- Consumers will only purchase more of a specific good if the price drops since they get less satisfaction from consuming more units of that good.
- Thus, the law of diminishing marginal value contributes to the understanding of the law of demand.
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Answer: pull marketing strategy
Explanation: In simple words, pull marketing strategy refers to the strategy in which the producer tries to create demand for the product by using promotional tools. Under this strategy, the firm focus to make customer seek a product unlike push strategy in which the firm focuses on pushing the product to people.
In the given case, WEE be is using TV medium to promote its product hence they are using pull marketing strategy.
Answer:
1. Reduces
2. Decrease in
3. Less Quantity
4. Increased level
5. Higher level
Explanation:
The challenge with the monetary policy introduced by the government is that it is a contractionary policy. A contractionary monetary policy fights inflation by reducing the money in supply in order to increase the cost of borrowing.
However, the problem with contractionary policy is that once the demands for goods and services decrease, the price of products will go down to entice people to consume and purchase. Once the price of products go down, the manufacturers are demotivated to produce more, hence production will go down.
Once production goes down, people are laid off work, and firms can no longer employ more leading to a higher level of unemployment.
The challenge therefore is that lowering inflation will lead to increased unemployment due to the ripple effects.
