The part of consumption that does not depend upon the level of disposable income is A) autonomous consumption. B) savings. C) average propensity to consume. D) saving. ANSWER A
Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model? A) The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family. B) The Keynesian model assumes that workers can lose their jobs to foreign competition during economic […]
What is TRUE about government budget deficits and surpluses since 1940? A) There have been more government budget surpluses than government budget deficits. B) The number of government budget deficits is about the same as the number of government budget surpluses. C) Balanced budgets have been more common than government budget deficits or government budget […]
Which of the following is likely to shift the credit demand curve of an automobile manufacturer to the right, assuming all else equal? A) An increase in the real interest rate B) A plan to increase production and expand to newer markets C) A plan to decrease production and exit from existing markets D) A […]
One of the economic costs of holding currency is that A) it fulfills no transactions role. B) it fulfills no precautionary role. C) its real value always increases. D) it earns no interest income. ANSWER D
According to Malthus, if the standard of living is above subsistence: A) couples have more children. B) consumption is more than savings. C) couples have fewer children. D) savings is more than consumption. ANSWER A
Fertility refers to: A) the ratio of deaths in an area to the population of the area. B) the number of children per adult or per woman of childbearing age. C) the ability of an individual to read or write in at least one language. D) the average period that an individual may be expected […]
Suppose total planned expenditures equal $20 trillion when the value of the price level is 100. If the price level drops to 90, total planned real expenditures will equal A) more than $20 trillion. B) $20 billion. C) less than $20 trillion. D) None of the above: Cannot be determined without additional information. ANSWER […]
Identify the correct statement. A) Countercyclical monetary policy stimulates the economy during a recession by shifting the labor demand curve to the left. B) Countercyclical fiscal policy stimulates the economy during a recession by shifting the labor demand curve to the left. C) Countercyclical monetary policy slows down the growth rate of an economy during […]
If the labor demand curve shifts to the right due to a government policy during a recession, and if wages are flexible, ________. A) real wages will increase B) real wages will decrease C) prices will fall D) unemployment will increase ANSWER A