Using a graph, analyze the Great Depression from a Keynesian perspective. What happened to unemployment? What will be an ideal response? ANSWER In the below figure, the equilibrium before the depression was at a price level of 100 and real GDP of $1 trillion. The depression was caused by a reduction in aggregate demand […]
Scarcity can best be defined as a situation in which A) there are no buyers willing to purchase what sellers have produced. B) there are not enough goods to satisfy all of the buyers’ demand. C) there is more than enough money to satisfy consumers’ wants. D) the resources we use to produce goods and […]
It has been noted that a country that grants a considerable amount of economic freedom will experience A) positive rates of per capita income growth. B) low levels of political freedom. C) dead capital. D) negative rates of per capita income growth. ANSWER A
At the point at which planned real consumption spending is equal to real disposable income A) the consumption function is above the 45-degree line. B) the consumption function intersects the savings function. C) the consumption function intersects the 45-degree line. D) the consumption function is below the 45-degree line. ANSWER C
A ________ occurs when a country’s exports exceed its imports. A) trade surplus B) budget surplus C) trade deficit D) fiscal deficit ANSWER A
A steady-state equilibrium refers to: A) an equilibrium in which the stock of physical capital remains constant over time. B) an equilibrium in which the inequality remains constant over time. C) an equilibrium in which the GDP per capita remains constant over time. D) an equilibrium in which the poverty rate remains constant over time. […]
A higher population growth rate can potentially lead to a higher rate of growth in per capita real GDP if A) it leads to an increase in the amount of dead capital. B) young workers replace older workers. C) there is a greater labor force participation rate. D) it leads to greater democracy in a […]
Which of the following assets is the most liquid in the United States? A) U.S. Treasury Bonds B) corporate bonds C) U.S. currency D) an antique car ANSWER C
If d is the depreciation rate and K is the capital stock, the amount of investment required to keep the economy in a steady state is given by: A) I = d – K. B) I = d + K. C) I = d × K. D) I = d/K. ANSWER C
The difference between ________ is known as the trade balance. A) consumption and imports B) investment and consumption C) exports and imports D) production and exports ANSWER C
