In the absence of a financial system, the two-period model without taxes predicts that A) consumption is more volatile that output. B) consumption is as volatile as output. C) consumption is less volatile than output. D) We do not know. ANSWER B
Date: September 10th, 2020
Characteristics that enable an item to serve well as money include each of the following, except ________. A) durable B) abundant C) divisible D) portable E) verifiable ANSWER B
Date: September 10th, 2020
A dynamic decision is one that A) is made very quickly. B) involves only the present. C) involves only the future. D) involves planning over more than one time period. ANSWER D
Date: September 10th, 2020
The balance of payments is zero A) as an accounting identity. B) because market forces ensure that this is so. C) only if the current account balance is zero. D) only if the capital account balance is zero. ANSWER A
Date: September 10th, 2020
Assume that a firm has $100 million in real assets and $90 in real liabilities. The value of its net worth would be ________. A) a negative $10 million. B) $190 million. C) $4190 billion. D) $10 million. ANSWER D
Date: September 10th, 2020
The two primary explanations for the excess volatility of consumption are A) consumers’ limited life spans and credit market imperfections. B) credit market imperfections and changes in market prices. C) changes in market prices and distorting taxes. D) distorting taxes and consumers’ limited life spans. ANSWER B
Date: September 10th, 2020
If current income increases as much as future income decreases A) current consumption decreases. B) current consumption stays the same. C) current consumption increases. D) We do not know. ANSWER C
Date: September 10th, 2020
An asset-price bubble entails ________. A) increasing the value of one’s assets to cover liability losses B) an increase in asset prices above their fundamental economic value C) reducing the number of participants in the underlying financial derivatives market D) an economic skins game ANSWER B
Date: September 10th, 2020
A rightward shift of the money supply ________. A) may come about from an increase in the quantity of money supplied by the Federal Reserve B) may come about from a decrease in the price level C) leads to a decrease in interest rates ceteris paribus D) all of the above E) none of the […]
Date: September 10th, 2020
The phrase “double coincidence of wants” ________. A) is useful to explain why barter is an efficient practice B) refers to two people who have similar tastes C) suggests a quite improbable circumstance D) clarifies the distinction between income and wealth E) none of the above ANSWER C
Date: September 10th, 2020
