Which of the following statements is true? A) Knowledge of economics complicates decision making. B) Economics is more of a theoretical subject with limited applications in the real world. C) Testing with data is essential to develop a good theory. D) Cost-benefit analysis can be applied only to limited economic decisions. ANSWER C
Which of the following statements is true? A) Economics does not provide insights into human behavior. B) Economic reasoning tends to reduce the quality of decision making. C) Economics is concerned with money, not choices. D) Economics can be used to predict people’s actions. ANSWER D
If a shift in aggregate demand only affects real Gross Domestic Product (GDP), then the short-run aggregate supply (SRAS) curve must be A) upward sloping. B) downward sloping. C) horizontal. D) vertical. ANSWER C
What is measured on the horizontal axis on the aggregate demand graph? A) nominal income B) real GDP per year C) unemployment D) the price level ANSWER B
According to the above table, the value of MPS is A) 0.9. B) 0.1. C) 0.2. D) increasing as real disposable income rises. ANSWER B
How does a government budget deficit occur? A) A government’s tax revenues exceed its spending. B) If a nation carries a public debt, it must be running a deficit every year. C) A government’s spending exceeds its tax revenues. D) A nation earns more on exports than it spends on imports. ANSWER C
What does research tell us about the impact of Ricardian equivalence effects on the economy? A) Ricardian equivalence effects may exist, but their magnitudes are unclear. B) There is no evidence of any impact of Ricardian equivalence effects. C) Ricardian equivalence effects have a huge impact on aggregate demand. D) There is a very small […]
It is conceivable that the APC, APS, MPC, and MPS could simultaneously be A) APC = 1.0; APS = 0; MPC = 1.0; MPS = 0.15. B) APC = 1.0; APS = 0.1; MPC = 0.8; MPS = 0.25. C) APC = 1.3; APS = -0.3; MPC = 0.9; MPS = 0.1. D) APC = […]
The value of all the equipment and structures of an economy is referred to as: A) wealth. B) national income. C) asset value. D) capital stock. ANSWER D
Stocks change ________ whereas flows relate to ________. A) and that causes flows to change; changes that have no impact on stocks B) between points in time; changes within a given time period C) within a given period of time; changes between points in time D) only at the end of each year; amounts at […]
