A fall in the price of flour, used in making cakes, is likely to: A) increase the supply of cakes. B) decrease the quantity supplied of cakes. C) increase the quantity supplied of cakes. D) decrease the supply of cakes. ANSWER A
Date: September 2nd, 2020
Why did the classical economists think that large-scale unemployment was not possible in a market economy? What will be an ideal response? ANSWER The classical economists accepted Say’s law, which indicated that desired expenditures will equal actual expenditures. The act of producing indicates one wants to buy other goods. A surplus or shortage in […]
Date: September 2nd, 2020
Which of the following is likely to lead to an increase in the quantity supplied of steel? A) An expected increase in the demand for steel in the future B) A rise in the market price of steel C) A fall in the wage rate of labor employed in the steel industry D) An increase […]
Date: September 2nd, 2020
The function of money that allows individuals a method to compare the relative value of goods and services is A) liquidity. B) medium of exchange. C) store of value. D) unit of accounting. ANSWER D
Date: September 2nd, 2020
What is Say’s law and what does it mean? What will be an ideal response? ANSWER Say’s law is: Supply creates its own demand. It means that a general glut or overproduction is not possible. The very process of producing specific goods is proof that other goods are desired. The income received from selling […]
Date: September 2nd, 2020
When the price level declines A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve. B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left. C) the interest rate rises, and consumers borrow fewer funds, […]
Date: September 2nd, 2020
Each member in a group might do what’s best for himself or herself instead of behaving in a way that optimizes the well-being of the entire grou A) irrational behavior. B) free riding. C) Pareto inefficiency. D) disequilibrium. ANSWER B
Date: September 2nd, 2020
Which of the following statements is true? A) The growth rate of South Korea has been less than the growth rate of the United States over the last 40 years. B) The United States and the United Kingdom have recorded a growth rate of over 10% per annum in the last 40 years. C) The […]
Date: September 2nd, 2020
“In the classical model, the equilibrium level of real Gross Domestic Product (GDP) is completely supply-determined.” Do you agree or disagree? Why? What will be an ideal response? ANSWER Agree. The long-run aggregate supply curve is vertical, so the equilibrium level of real Gross Domestic Product (GDP) is determined by the location of the […]
Date: September 2nd, 2020
In the above table, saving is positive when real disposable income is greater than A) $300. B) $100. C) zero. D) $500. ANSWER D
Date: September 2nd, 2020
