Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending. The reason is A) that people do not realize that taxes have increased also. B) the interest rate on the debt will increase. C) people will […]
Which of the following factors would economists consider “key” to economic development? A) policies that promote consumption expenditures by households B) establishing a system of property rights C) expansionary monetary policy D) All of the above are correct. ANSWER B
Assuming all else equal, if a household is optimistic about future income, it is likely to cause: A) the current credit supply curve of the household to shift to the left. B) an upward movement along the current credit supply curve of the household. C) the current credit supply curve of the household to shift […]
Holding money to meet unplanned expenditures is A) the precautionary demand for money. B) the transactions demand for money. C) the asset demand for money. D) the capital demand for money. ANSWER A
Policy making that is carried out in response to a rule is A) restrictive policy making. B) passive policy making. C) determined policy making. D) active policy making. ANSWER B
Which of the following statements is true? A) Economic growth always reduces poverty. B) Economic growth is ineffective in reducing both poverty and inequality. C) Economic growth always reduces inequality. D) Economic growth can reduce poverty only if it is not associated with a significant rise in inequality. ANSWER D
There is only one firm in a small island country. The firm produced 1,000 units of Good X during a particular year out of which it could sell 900. If each unit of the good sells for $500, what is the gross domestic product of the country? A) $150,000 B) $450,000 C) $40,000 D) $500,000 […]
In the above figure, if the price level is 150 A) total planned production exceeds total expenditures. B) total planned production is less than total expenditures. C) total expenditures exceed total planned expenditures. D) total planned production equals total expenditures. ANSWER A
The short-run aggregate supply curve is positively sloped because A) real interest rates rather than nominal rates are used. B) no price adjustments take place in the short-run. C) complete price adjustments take place in the short-run. D) some price adjustments take place in the short-run. ANSWER D
All of the following are keys to economic development EXCEPT A) establishment of a system of property rights. B) minimizing “creative destruction.” C) open economies. D) an educated workforce. ANSWER B
