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 […]
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
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
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
An optimizing economic agent will use the ________ rate while calculating the economic cost of a loan. A) exchange B) nominal interest C) real interest D) tax ANSWER C
To the extent that a direct expenditure offset results from an expansionary fiscal policy, A) the fiscal policy will not be discretionary. B) the time lags associated with the implementation of fiscal policy will shorten. C) the stimulative effect will be less than anticipated. D) the stimulative effect will be more than anticipated. ANSWER […]
Which of the following statements is true? A) Growth in technology is linear in nature. B) Growth in land productivity is exponential in nature. C) Growth in technology is exponential in nature. D) Growth in labor productivity is exponential in nature. ANSWER C
A government budget deficit occurs during a budget year when A) tax revenues > government spending. B) tax revenues < government spending. C) tax revenues = government spending. D) tax revenues + government spending = personal consumption. ANSWER B
The transactions demand for money exists because households A) do not like the fact that money is a liquid asset. B) must save for unexpected emergencies. C) are insensitive to interest rate changes. D) do not receive their incomes at the same time they wish to make purchases. ANSWER D
Suppose that real GDP is initially $14 trillion and the government attempts to increase real GDP to $15 trillion. The marginal propensity to consume is 0.8, and every $1.00 increase in real government spending crowds out $0. 50 in real planned investment expenditures. Which increase in government spending below could yield the desired level of […]
