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
Along the 45° reference line A) the average propensity to consume is represented. B) planned real expenditures equal real disposable income. C) consumption expenditures equal saving. D) the relationship between consumption and income is represented. ANSWER B
When the credit demand curve is relatively flat: A) the quantity of credit demanded is relatively sensitive to changes in the real interest rates. B) the quantity of credit demanded is relatively sensitive to changes in the taxation rates. C) the quantity of credit demanded is not responsive to changes in the taxation rates. D) […]
The asset demand for money is related to which function of money? A) standard of deferred payment B) store of value C) medium of exchange D) unit of accounting ANSWER B
Consider two economies with the same GDP per capita: Barylia and Lithasia. The savings rate in Barylia is 20% while the savings rate in Lithasia is 60%. a. Which of these two countries is likely to accumulate capital faster? b. The government in Barylia decides to provide incentive to its citizens to increase the savings […]
What is the real-balance effect of an increase in the price level? What will be an ideal response? ANSWER The real-balance effect is the change in the real value of the money balances when the price level changes, all other things constant. An increase in the price level means that the purchasing power of […]
