Assume that the market for cell phones comprises two buyers and two sellers. The following table shows the demand and supply of cell phones at different prices. Using the information in the table, determine the market equilibrium price and quantity. Price ($) Cell Phones Demanded (Buyer 1 ) Cell Phones Demanded (Buyer 2 ) 10 […]
Savers are willing to lend out money because: A) they prefer to spend money in the future rather than today. B) the rate of inflation in an economy is normally positive. C) of altruism. D) the rate of inflation in an economy is normally negative. ANSWER A
Supply-side economics A) promotes increasing taxes to create additional revenue for government spending. B) promotes expansionary fiscal policy by increasing government spending. C) is based on the Ricardian equivalence theorem. D) promotes reducing taxes to create incentives to increase productivity. ANSWER D
In a fiduciary monetary system, the value of the money issued by a government is based on A) the ability to convert it to some asset of value, like silver. B) the gold held in that government’s vaults. C) public confidence in that currency’s acceptability and predictability of value. D) its being made out of […]
An economic model suggests that an additional year of education increases a student’s future wages by 15 percent. Using this model, answer the following questions: a) Gary completes 8 years of education, and John completes 9 years of education. If Gary earns $20 per hour, how much is John expected to earn? b) John completes […]
Which of the following identifies correct reasons for the sustained growth in the Western world post 19th century? A) Demographic transition and the American civil war B) The American civil war and the Industrial Revolution C) The Agricultural Revolution and the Industrial Revolution D) Demographic transition and the Industrial Revolution ANSWER D
If the government adopts expansionary monetary policy during a recession, ________. A) tax rates increase B) government spending falls C) access to credit increases D) interest rates increase ANSWER C
Supply-side inflation is caused by A) an increase in aggregate demand and no change in aggregate supply. B) a decrease in aggregate supply and no change in aggregate demand. C) a decrease in aggregate demand and no change in aggregate supply. D) an increase in aggregate supply and no change in aggregate demand. ANSWER […]
Which of the following statements identifies a correct reason for demographic transition? A) The increase in migration of labor from urban to rural areas reduces fertility. B) Transition from a rural economy to an urban economy reduces income below subsistence that reduces fertility and the size of families. C) The cost of rearing children is […]
The concept of an open economy means that A) a nation’s borders are open to flows of imports and exports. B) exports should be controlled but imports should be allowed in without restriction. C) imports and exports should be restricted. D) imports should be limited while exports should be expanded. ANSWER A
