In an economic downturn, sticky wages and prices reduce the economy’s speed of adjustment because A) hyperinflation will likely occur. B) businesses are unable to adjust quickly to changes in aggregate demand. C) they cause deflation. D) union workers would likely quit and look for work elsewhere. ANSWER B
Date: September 2nd, 2020
In the Keynesian model, consumption A) is positively related to income but saving is not systematically related to either income or interest rates. B) and saving are positively related to the real interest rate. C) and saving are positively related to income. D) is positively related to income and saving is negatively related to the […]
Date: September 2nd, 2020
Empirical evidence refers to: A) a set of facts established by observation and measurement. B) the process of developing and testing models. C) a proposed explanation for a phenomenon. D) a simplified representation of reality. ANSWER A
Date: September 2nd, 2020
Which of the following statements is true? A) If households expect higher taxes in the future, they will decrease their current savings rate. B) The savings rate of households is dependent only on current consumption expenditure. C) The savings rate of households is dependent only on consumption expenditure planned for the future. D) If households […]
Date: September 2nd, 2020
An individual may borrow a certain sum of money from any of the three banks in his town. Bank 1 offers him loans at an annual rate of 5%, Bank 2 offers him loans at an annual rate of 3% per year, and Bank 3 offers him a loan at an annual rate of interest […]
Date: September 2nd, 2020
The existence of money in an economy promotes efficiency by A) facilitating trade, thereby allowing for greater specialization. B) allowing for the formation of corporations as legal entities. C) creating incentives to be self-sufficient. D) creating an equal distribution of income. ANSWER A
Date: September 2nd, 2020
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
Date: September 2nd, 2020
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
Date: September 2nd, 2020
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
Date: September 2nd, 2020
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
Date: September 2nd, 2020
