Refer to the above figure. The marginal propensity to consume and the marginal propensity to save A) are 0.75 and 0.25, respectively. B) depend on the level of income. C) are 0.90 and 0.10, respectively. D) are 0.83 and 0.17, respectively. ANSWER D
Date: September 2nd, 2020
If the annual inflation rate in an economy is “i”, then $1 borrowed at the beginning of a year will have the same purchasing power as ________ dollars at the end of the year. A) (1 – i) B) (1/i) C) (1 + i) D) i ANSWER C
Date: September 2nd, 2020
Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from AD1 to AD2. Interest rates have started to rise. Which of the following statements is TRUE in the short run? A) Real GDP will be $14 trillion since the effect of government spending is not […]
Date: September 2nd, 2020
Refer to the figure above. When the demand curve for gas is D2 and the supply curve for gas is S, the surplus in the market when price is $8 is: A) 20 gallons. B) 55 gallons. C) 25 gallons. D) 50 gallons. ANSWER D
Date: September 2nd, 2020
Suppose in a country, the working-age population doubles due to immigration. However, the country neglects investment in research and development and hence the country’s level of technology is stagnant. Which of the following statements will be true of this economy? A) The economy will experience steady economic growth. B) The savings rate will remain stagnant […]
Date: September 2nd, 2020
Which of the following is TRUE when a budget deficit exists? A) Dissaving exists. B) Tax revenues exceed government expenditures. C) A trade surplus exists. D) Government expenditures exceed tax revenues. ANSWER D
Date: September 2nd, 2020
The precautionary demand for holding money arises because A) people want be able to make unexpected purchases or to meet emergencies. B) credit cards charge low interest rates, which makes money more attractive than credit. C) expected transactions are completed more easily with debit cards than with credit cards. D) people would rather hold money […]
Date: September 2nd, 2020
Giving the store clerk a $20 bill for a sweater priced at $20 is an example of money serving as a A) medium of exchange. B) unit of accounting. C) store of value. D) standard of deferred value. ANSWER A
Date: September 2nd, 2020
An increase in aggregate demand is shown by A) a movement up along the aggregate demand curve. B) a leftward shift in the aggregate demand curve. C) the movement down along the aggregate demand curve. D) a rightward shift in the aggregate demand curve. ANSWER D
Date: September 2nd, 2020
Refer to the above figure. The figure represents the consumption function for a consumer. Point A represents A) positive saving. B) negative consumption. C) autonomous consumption. D) zero saving. ANSWER C
Date: September 2nd, 2020
