Refer to the above figure. Suppose the U.S. economy is currently operating at point C. Which of the following actions would you recommend to the president of the United States? A) Engage in contractionary fiscal policy by reducing government spending. B) Reduce taxes to stimulate investment, consumption and net exports. C) Increase government spending while […]
Refer to the table above. What is the market demand for wine when the price is $1? A) 50 units B) 80 units C) 51 units D) 76 units ANSWER D
According to the above figure, planned consumption and income are equal at an income level of A) Y0. B) Y1. C) Y2. D) Y3. ANSWER A
Which of the following is a factor that determines the shape of the aggregate demand curve? A) the real-balance effect B) the wage effect C) the nominal-balance effect D) the price level effect ANSWER A
Which of the following statements is true? A) A rational consumer makes his decisions depending on what the majority chooses. B) A trade-off refers to the exchange of goods between economic agents through a barter system or mutual exchange. C) A budget constraint is an economic tool that quantifies the trade-off between consumption of two […]
Other things being equal, a reduction in taxes will A) lead to a corresponding reduction in interest rates increasing the crowding out effect. B) influence the short run aggregate supply curve but not the aggregate demand curve. C) cause an increase in aggregate demand due to increases in consumption, investment, or net exports. D) lead […]
For barter to occur there must be A) two people willing to pay with credit. B) a double coincidence of wants for each good to be exchanged. C) one person who pays cash. D) hyperinflation. ANSWER B
Traditionally, economists regarded improvements in technology as A) unrelated to economic growth in any systematic way. B) the most important factor that helped explain economic growth, and basically the only factor that would cause economic growth. C) an important factor in explaining economic growth that was due to economic forces that also could easily be […]
According to the above figure, at an income level of Y1, A) the economy saves an amount equal to BD. B) the economy dissaves an amount equal to BD. C) the average propensity to save is greater than one. D) the marginal propensity to save is falling. ANSWER B
A barter arrangement simply means A) the government has paid for the goods. B) a promise to pay in the future. C) that gold must be offered from one party. D) a direct exchange of goods without the use of money. ANSWER D
