Consider a closed economy without the government. If the savings rate in the economy is 15% and the aggregate savings is $6,000, the GDP of the economy is: A) $15,000. B) $27,000. C) $40,000. D) $30,000. ANSWER C
Date: September 2nd, 2020
Consider a closed economy without the government. If the GDP of the economy is $63,000 and the consumption in the economy is $45,000, the savings rate in the economy is: A) 35.75%. B) 28.57%. C) 16.86%. D) 24%. ANSWER B
Date: September 2nd, 2020
If the nominal interest rate in an economy is 4% and the real interest rate in the economy is 2%, the rate of inflation in the economy must be: A) -2%. B) 4%. C) 2%. D) 0.5%. ANSWER C
Date: September 2nd, 2020
A situation in which spending exceeds income is A) average propensity to save. B) dissaving. C) the saving function. D) the consumption function. ANSWER B
Date: September 2nd, 2020
Refer to the above figure. Line ACE is called A) the consumption function. B) the saving function. C) the savings function. D) the 45-degree line. ANSWER D
Date: September 2nd, 2020
The crowding-out effect is A) the tendency of expansionary fiscal policy to cause an increase in planned investment but not in planned consumption in the U.S. private sector. B) the tendency of contractionary fiscal policy to cause an increase in planned investment but a decrease in planned consumption in the U.S. private sector. C) the […]
Date: September 2nd, 2020
A monetary system is preferable over the barter system because of the problems associated with A) the law of diminishing marginal utility. B) the law of increasing relative costs. C) the double coincidence of wants. D) cash leakages. ANSWER C
Date: September 2nd, 2020
In the short run, an increase in the price level induces firms to expand production because A) they can increase profits by increasing maintenance costs. B) higher prices allow firms to hire more inputs by offering higher prices for inputs, which increases productivity and profits. C) each firm must keep its production level up to […]
Date: September 2nd, 2020
If the government increases spending while holding taxes constant, we expect A) a decrease in real saving as consumers follow suit and also increase borrowing. B) planned real investment spending by businesses to increase. C) an increase in investment spending by businesses too, as they anticipate future economic growth. D) interest rates to rise. […]
Date: September 2nd, 2020
The public debt is A) an excess of government spending over government revenues during a given time period. B) all federal government debt irrespective of who owns it. C) a situation in which the government’s spending is exactly equal to the total taxes and other revenues it collects during a given time period. D) the […]
Date: September 2nd, 2020
