John gets paid monthly and pays for everything with cash. When he cashes his check he keeps $200 for food, $100 for utilities, $900 for rent, $50 for transportation, $100 for entertainment and $300 for unexpected expenditures. Which of the following statements is TRUE? A) The transactions demand for money is $1,350, the precautionary demand […]
Refer to the above figure. Suppose that the economy starts at AD1. If the government reduces taxes, then the economy goes to AD2, but then falls back to AD3. This is an example of A) complete crowding-out effect. B) partial crowding-out effect. C) Ricardian equivalence. D) laissez-faire. ANSWER B
Which of the followings statements is true? A) The amount of capital accumulation will be higher if the capital stock of last year was low. B) The amount of depreciation will be lower if the investment on capital last year was high. C) The amount of capital accumulation will be higher if the capital stock […]
If the nominal interest rate is 5.6% and inflation rate is 2.4%, the real interest rate is ________. A) 4% B) 3.2% C) 6.4% D) 8% ANSWER B
If the net public debt expanded last year, then which of the following most likely occurred during the year? A) The government’s budget was balanced. B) The government’s tax collections exceeded its spending. C) The government experienced a budget surplus. D) The government experienced a budget deficit. ANSWER D
Which of the following will be included in the calculation of GDP using the expenditure method? A) A bank’s payment of interest to its customers B) A worker’s wage C) A firm’s payment of employee bonuses D) A domestic producer’s export of clothes ANSWER D
In the above table, dissaving occurs at every level of income below A) $5,000. B) $7,000. C) $10,000. D) $8,000. ANSWER A
Which of the following is TRUE? A) APC – APS = 1 B) MPC + MPS = 1 C) 1 + APC = APS D) APC + MPS = 1 ANSWER B
Even when a particular monetary asset is not performing one of the functions of money well, people still use the asset because A) once an asset is defined as money it is always money. B) people expect money will come back at a later date. C) they have no choice. D) it is still easier […]
Which of the following statements is true? A) An excess demand for credit exerts an upward pressure on the real rate of interest. B) At rates of interest below the equilibrium rate, there is an excess supply of credit. C) An excess supply of credit exerts an upward pressure on the real rate of interest. […]
