As nominal Gross Domestic Product (GDP) rises, the transactions demand for money A) decreases, and the money demand curve shifts to the left. B) remains constant, and the money demand curve remains the same. C) increases, and the money demand curve shifts to the left. D) increases, and the money demand curve shifts to the […]
Other things remaining same, a right shift in the demand curve will lead to: A) a decrease in the equilibrium price and the equilibrium quantity. B) a decrease in the equilibrium price and an increase in the equilibrium quantity. C) an increase in the equilibrium price and the equilibrium quantity. D) an increase in the […]
Refer to the above figure. Autonomous consumption is A) only at point A. B) to the left of point B. C) only at point B. D) to the right of point B. ANSWER A
When government spending is equal to the tax revenues during a specific time period, this is known as a A) government budget deficit. B) government budget surplus. C) balanced budget. D) public debt. ANSWER C
Suppose you are offered a new smartphone in exchange for thirty hours of your work in your friend’s garden. This is an example of A) money as a standard of deferred payment. B) barter. C) money as a medium of exchange. D) money as a store of value. ANSWER B
Define savings rate. If the aggregate savings in an economy is $10,000 and the aggregate income in the economy is $70,000, what is the savings rate in the economy? What will be an ideal response? ANSWER The savings rate refers to the fraction of income that households save. It can be obtained by dividing […]
The slope of the credit demand curve from the text book implies that the: A) higher the rate of taxation, the lower the quantity of credit demanded. B) higher the real rate of interest, the higher the quantity of credit demanded. C) higher the real rate of interest, the lower the quantity of credit demanded. […]
The Keynesian short-run aggregate supply curve is horizontal because A) it represents Say’s law. B) it reflects wage and price inflexibility. C) it represents the full employment level of real GDP. D) it reflects the absence of money illusion. ANSWER B
When government expenditures are greater than tax revenues A) there will be budget surplus. B) the public debt will be reduced. C) there will be budget deficit. D) automatic stabilizers do not kick in. ANSWER C
Refer to the table above. What is the average monthly wage? A) $612 B) $650 C) $558 D) $450 ANSWER C
