Which of the following will NOT lead to increased capital investment within a country? A) increased uncertainty about private property rights B) increased certainty about private property rights C) increased certainty about being able to reap the gains from investing D) the decreased possibility of nationalization of private property ANSWER A
Which of the following statements is true? A) Data are facts established by observation and measurement. B) Theories are statistics that describe the real world. C) Hypotheses are predictions that can be tested with data. D) Empirical evidences are facts, measurements, or statistics that describe the world. ANSWER C
The savings rate in an economy equals: A) aggregate savings divided by GDP. B) GDP minus aggregate consumption. C) GDP divided by aggregate savings. D) aggregate savings multiplied by GDP. ANSWER A
Supply-side economists argue that A) lower tax rates always lead to lower tax revenues. B) higher tax rates lead to increased productivity. C) lower tax rates sometimes lead to increased tax revenues. D) lower tax rates lead to a drop in real Gross Domestic Product (GDP). ANSWER C
Assuming all else equal, a rise in the rate of interest: A) results in a fall in the cost of borrowing. B) results in a fall in the amount of interest accumulated on a loan. C) results in a fall in the quantity of credit demanded. D) results in an increase in the number of […]
Which of the following statements is true? A) Savings of households are independent of tax rates. B) Higher interest rates typically encourage more savings. C) An increase in the consumption of households increases savings of the households. D) Households that expect an increase in future earnings are likely to save more. ANSWER B
The more certain private property rights are A) the less people need to invest in education or human capital development. B) the more an economy must grow to maintain a certain living standard. C) the less entrepreneurship there will be. D) the more capital accumulation there will be. ANSWER D
A federal deficit of $300 billion means that A) the government plans on collecting $300 billion in taxes this year. B) the government has a total debt of $300 billion. C) the government is spending $300 billion a year more than it is collecting in taxes. D) government spending is $300 billion a year. […]
the aggregate savings in an economy is $1,750 and the GDP of the economy is $55,000. The savings rate in the economy is: A) 1.8%. B) 3.15%. C) 10%. D) 8.96%. ANSWER B
A debtor’s quantity of credit demanded and the rate of interest are likely to be: A) positively correlated. B) unrelated. C) negatively correlated. D) positively related if the rate of interest is below 10% and negatively related if it is above 10%. ANSWER C
