All else equal, an increase in government borrowing is likely to cause a(n): A) leftward shift of the credit demand curve. B) rightward shift of the credit demand curve. C) downward movement along the credit demand curve. D) upward movement along the credit demand curve. ANSWER B
Date: September 2nd, 2020
The Keynesian contention that the short-run aggregate supply curve is horizontal is based on the assumption that there are A) flexible prices. B) real prices. C) upward sloping prices. D) sticky prices. ANSWER D
Date: September 2nd, 2020
In a hypothetical country, the average wage of five 40-year-old citizens with college education is $36,896, and the average wage of five 40-year-old citizens with high school education is $25,864. What is the returns-to-college education in the country? Is there any limitation of this analysis? Explain your answer. ANSWER Dividing the average salary of […]
Date: September 2nd, 2020
Which of the following will result in secular deflation? A) a one-time rightward shift of the long-run aggregate supply curve B) continuous rightward shifts of the aggregate demand curve C) continuous rightward shifts of the long-run aggregate supply curve D) a one-time rightward shift of the aggregate demand curve ANSWER C
Date: September 2nd, 2020
If there is excess demand in a perfectly competitive market, does the government need to intervene to restore the equilibrium price and quantity? What will be an ideal response? ANSWER No, in a perfectly competitive market, no government intervention is required to restore equilibrium as equilibrium is automatically restored. A situation of excess demand […]
Date: September 2nd, 2020
Which of the following is negative for the “typical” consumer at some level of real disposable income? A) average propensity to consume B) marginal propensity to save C) average propensity to save D) marginal propensity to consume ANSWER C
Date: September 2nd, 2020
An economic model suggests that for every additional year of education, the future wages increase by 5 percent. If Richard, with 12 years of education, earns $20 per hour, how much will he earn per hour if he decides to undertake four additional years of education? ANSWER The model suggests that if Richard earns […]
Date: September 2nd, 2020
The opportunity cost of holding money is measured by A) the interest yield that could have been earned by holding some other asset. B) the liquidity of interest-bearing assets. C) the price of government bonds. D) a dollar. ANSWER A
Date: September 2nd, 2020
John is expecting to get a hike in his monthly salary after three months. Assuming all else equal, this is likely to cause a(n) ________ his current credit demand curve. A) leftward shift in B) upward movement along C) rightward shift in D) downward movement along ANSWER C
Date: September 2nd, 2020
Why do policymakers sometimes use policies to limit growth? What will be an ideal response? ANSWER Policymakers sometimes use policies to limit growth because factors such as irrational optimism about the economy lead to unsustainable expansion. Left alone, unsustainable expansions can subsequently lead to very severe downturns because irrational optimism can implode suddenly and […]
Date: September 2nd, 2020
