Which of the following statements is true? A) Correlation can only arise when causation is not present. B) Causation can only arise when correlation is not present. C) Causation arises when there is correlation between two variables, and can also arise even when there is no correlation. D) Correlation arises when there is causation and […]
A fiduciary monetary system is A) fully backed by gold. B) dependent on barter for exchanges of goods and services. C) dependent on the public’s faith to accept the currency. D) one which cannot have any inflation. ANSWER C
Describe the Malthusian Cycle. What will be an ideal response? ANSWER Malthusian cycle refers to the preindustrial pattern in which increases in aggregate income lead to an expanding population, which in turn reduces income per capita and puts a downward pressure on population. The cycle starts with an increase in GDP above the subsistence […]
Gross public debt is A) the total value of budget deficits plus budget surpluses over the past five years. B) an excess of government spending over government revenues during a given time period. C) a situation in which the government’s spending is exactly equal to the total taxes and other revenues it collects during a […]
The credit supply curve is: A) horizontal. B) vertical. C) downward sloping. D) upward sloping. ANSWER D
Which one of the following is TRUE? A) New growth theory suggests that there is no connection between the level of education in a country and its rate of economic growth. B) New growth theory suggests that education benefits only those people who receive it, and not the population as a whole. C) Investments in […]
Which of the following is NOT a reason why people are motivated to hold money? A) precautionary demand B) liability demand C) asset demand D) transactions demand ANSWER B
Ceteris paribus, deficit spending results in higher interest rates, which can A) ultimately have a positive impact on productivity gains and society’s standard of living. B) accelerate growth in investment spending. C) crowd out private investment. D) increase the wealth of future generations. ANSWER C
Which of the following happens if the long-run real interest rates fall? A) The demand for loans fall. B) Employment increases. C) Nominal wages fall. D) Imports increase. ANSWER B
Which of the following is a checkable and debitable account? A) a savings account B) a brokerage account with your stockbroker C) a checking account D) All of the above are checkable and debitable accounts. ANSWER C
