Assuming all else equal, the ________, the lower the nominal interest rate. A) lower the inflation rate B) higher the inflation rate C) lower the income tax rates D) higher the income tax rates ANSWER A
Which of the following is consistent with secular deflation? A) a persistently decreasing price level caused by money being withdrawn from the economy B) a persistently increasing price level caused by several periods of economic growth with decreasing AD C) a persistently decreasing price level caused by increases in government expenditures D) a persistently decreasing […]
Which of the following will be included in the calculation of gross domestic product using the expenditure method? A) Wages paid to labor by firms B) Interest paid by households for loans C) Services purchased by the government D) Dividends paid by firms to shareholders ANSWER C
If short-run aggregate supply is upward sloping, the assumption is that A) prices are perfectly sticky. B) prices are set by government mandate. C) prices adjust gradually. D) prices are constant. ANSWER C
Structural unemployment may result from all of the following factors EXCEPT A) improved elementary and secondary education. B) union wage contracts. C) government-imposed licensing arrangements that restrict entry into certain professions. D) welfare and unemployment benefits. ANSWER A
According to the United Nations, the largest expected growth in population for the coming decades will occur on which continent? A) South America B) Africa C) Europe D) North America ANSWER B
The long-run real interest rate is the long-run nominal interest rate ________. A) minus inflation expectations B) plus all taxes C) plus inflation expectations D) minus all taxes ANSWER A
People hold money as an asset rather than other assets because A) it holds its value. B) there is no cost to holding money as an asset. C) it grows in value. D) it is highly liquid. ANSWER D
If the quantity of credit demanded in a market exceeds the quantity of credit supplied in the market: A) the real rate of interest tends to rise. B) the unemployment rate tends to fall. C) the rate of inflation tends to rise. D) the real rate of interest tends to fall. ANSWER A
Which of the following statements is true? A) Randomization allows for classification of participants according to their choice. B) The subjects in the treatment group and the control group of an experiment are treated identically, except along a single dimension. C) Randomization is not used in medical experiments. D) The subjects in the treatment group […]