What information is provided by the aggregate demand curve? What will be an ideal response? ANSWER The aggregate demand curve relates total planned real expenditures to each price level. The price level is measured by the GDP deflator. The lower is the price level, the higher are total planned real expenditures, other things being […]
The average price of ten commodities is $330. If an eleventh commodity whose price is $600 is included in the calculation, the new average is: A) $330.35. B) $450.25. C) $354.54. D) $254.54. ANSWER C
Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2011 was $25 and 60 units, respectively. In 2014, the equilibrium price of Z had decreased to $15 and the equilibrium quantity had also decreased to 50 units. Other things remaining the same, which of the following could explain […]
If the government has no debt initially, but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years, then the government has A) a budget surplus of $0.5 billion per year and a debt of $2 billion at the end of the […]
Expansionary fiscal policy falls short of its goal. Some economists claim it is due to indirect crowding out. What evidence would be consistent with this claim? A) The interest rate increased. B) The price level decreased. C) Saving decreased. D) An increase in consumer spending occurred. ANSWER A
Economists have determined that there are four factors that seem to strongly affect a nation’s rate of economic development. Which is NOT one of these four factors? A) supporting current industries and the jobs they provide instead of adopting new technology that brings disruptive social changes B) developing an educated population C) establishing a system […]
The degree to which an asset can be acquired or disposed of without much loss of nominal value or transaction costs is known as A) fiducia. B) credit. C) fiat money. D) liquidity. ANSWER D
The transactions demand for money refers to A) the demand to hold money for use in planned purchases. B) the demand to hold money as a long-term store of value. C) the desire for income. D) the desire for wealth. ANSWER A
Three candidates for political office disagree over the benefits of enlarging the federal budget deficit. Candidate C says the stimulation package is needed to increase employment and real GDP; Candidate D says it will only cause higher prices; and Candidate F says it will have no effect on either real GDP or the price level. […]
The study of factors that contribute to the economic growth of a country is known as A) savings economics. B) entrepreneurial economics. C) natural resource economics. D) development economics. ANSWER D
