When the government grants an inventor a patent A) he has the exclusive right to make, sell or use his invention for 5 years. B) the protection of a current invention would increase spending on R&D. C) the patent holder has less incentive to invest in R&D because one successful invention removes the need to […]
Date: September 2nd, 2020
Keynes believed that the way to prevent recessions and depressions was to A) increase aggregate demand through expansionary fiscal policy. B) maximize the crowding out effect. C) only change tax rates as a means of regulating the economy. D) reduce spending when there is a recessionary ga ANSWER A
Date: September 2nd, 2020
According to Keynes A) consumption is directly related to income but saving has no relationship with income. B) consumption is directly related to income but saving is inversely related to income. C) both consumption and saving are positively related to real disposable income. D) consumption is positively related to the interest rate. ANSWER C
Date: September 2nd, 2020
When consumption spending is greater than disposable income, we know with certainty that we have A) dissaving. B) negative net investment. C) excess thrift. D) positive savings. ANSWER A
Date: September 2nd, 2020
Which of the following statements is true? A) An optimizing individual is also likely to exhibit rationality. B) Optimization requires individuals to foresee the future perfectly. C) The less information that is available, the easier it is to make optimal decisions. D) An optimizing individual need not consider the risks involved in various choices. […]
Date: September 2nd, 2020
Suppose real disposable income increases by $1,000. Given this information, we know that A) consumption will generally increase by more than $1,000. B) saving will generally increase by exactly $1,000. C) consumption will generally increase by exactly $1,000. D) consumption will generally increase by less than $1,000. ANSWER D
Date: September 2nd, 2020
The Law of Diminishing Marginal Benefit states that: A) the demand for a commodity declines as its price increases. B) the demand for a commodity is more dependent on income than on price. C) the willingness to pay for an additional unit declines as more of a good is consumed. D) lower levels of consumption […]
Date: September 2nd, 2020
Which of the following statements is true? A) Rational economic agents maximize more than just monetary income. B) It is not necessary to consider the risks of a particular alternative while making an optimal decision. C) An individual does not require information to make optimal decisions. D) The principle of optimization is only accurate when […]
Date: September 2nd, 2020
The Law of Demand states that: A) the demand for a commodity is mostly influenced by consumers’ income. B) the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market. C) the quantity demanded of a commodity varies inversely with the price of the commodity. D) the demand for […]
Date: September 2nd, 2020
Jenny likes chocolates. One day, a friend offers her a chocolate bar and she is extremely happy on receiving it. As the day progresses, many other people also buy her chocolate. As she gets more and more chocolates, her excitement on receiving each bar is seen to gradually lessen. Which economic principle is reflected in […]
Date: September 2nd, 2020
