An example of fiscal policy is A) a reduction in government spending. B) an increase in autonomous spending by consumers. C) a reduction in investment spending by the private sector. D) an increase in Social Security spending by the elderly. ANSWER A
Date: September 2nd, 2020
Refer to the table above. If the market price of wine is $8/bottle, and the market demand for wine is 19 bottles, David’s consumption of wine is: A) 4 bottles. B) 9 bottles. C) 7 bottles. D) 12 bottles. ANSWER C
Date: September 2nd, 2020
A budget constraint represents the: A) inequality in the incomes earned by various economic agents. B) aggregate income earned by all the firms in an economy. C) total money income that an agent earns in different time periods. D) goods and services an economic agent can choose given her limited income. ANSWER D
Date: September 2nd, 2020
Other things being equal, the lower planned real expenditures along an aggregate demand curve are, the A) lower the level of endowments. B) higher the price level. C) lower the price level. D) more the production possibilities cure shifts to the left. ANSWER B
Date: September 2nd, 2020
Which of the following examples best describes the Law of Diminishing Marginal Benefit? A) If a seller of notebooks in a perfectly competitive market charges above the market price, his profit decreases. B) With each additional pen Jill buys, her willingness to pay for another pen decreases. C) Each additional unit of ice cream that […]
Date: September 2nd, 2020
Suppose the government increases lump-sum taxes. This causes A) consumption spending to decrease and spending on imports to increase. The effect on aggregate demand depends on whether domestic spending or spending on imports decreased the most. B) disposable income to decrease, which causes consumption spending to decrease and aggregate demand to decrease. C) government spending […]
Date: September 2nd, 2020
Paul Romer’s theory on the importance of knowledge differs from traditional theory in that Romer A) argues, that investment is not important in promoting growth, but that the acquisition of knowledge is the sole determinant of economic growth. B) argues that an investment-knowledge cycle allows a once-and-for-all increase in investment to permanently raise a country’s […]
Date: September 2nd, 2020
When the price level increases, total planned real expenditures on goods and services falls. All of the following are responsible EXCEPT A) the interest rate effect. B) the real-balance effect. C) the substitution effect. D) the open economy effect. ANSWER C
Date: September 2nd, 2020
In the classical model, the interest rate will adjust to equate A) consumption spending with real GDP. B) saving with investment. C) export spending with import spending. D) the economic growth rate with the growth rate of import spending. ANSWER B
Date: September 2nd, 2020
Which of the following explains why the aggregate demand curve is downward sloping? A) the open economy effect B) the real-balance effect C) the interest rate effect D) all of the above ANSWER D
Date: September 2nd, 2020
