According to the permanent income hypothesis, a person’s consumption increases only when A) the person’s average lifetime income increases. B) the person saves more. C) the person’s current income increases. D) the person’s income increases unexpectedly. ANSWER A
Date: September 2nd, 2020
According to the above table, the marginal propensity to consume is A) 0.8. B) 0.75. C) 0.5. D) 0.6. ANSWER A
Date: September 2nd, 2020
The total of all planned expenditures in the entire economy is A) aggregate supply. B) LRAS. C) aggregate demand. D) the open economy effect. ANSWER C
Date: September 2nd, 2020
Which of the following correctly identifies the trade-off that a budget constraint represents? A) The amount of one good that has to be given up to purchase an additional unit of the other good B) The optimum combination of goods that a consumer with a given income should purchase C) The maximum amount of two […]
Date: September 2nd, 2020
The discretionary change of government expenditures or taxes to achieve national economic goals is A) a direct expenditure upset. B) fiscal policy. C) Ricardian-equivalence theorem. D) supply-side economics. ANSWER B
Date: September 2nd, 2020
Which of the following does free trade encourage? A) higher rates of economic growth B) more rapid spread of technology C) domestic industries’ access to larger markets D) all of the above ANSWER D
Date: September 2nd, 2020
In the classical model, a change in aggregate demand A) causes changes in both the long-run real GDP and in the price level. B) causes a change in long-run real GDP but not in the price level. C) causes a change in the price level but not in the long-run real GDP. D) has no […]
Date: September 2nd, 2020
The transformation of an invention into something that benefits the economy is known as A) a compounder. B) an externality. C) an innovation. D) a patent. ANSWER C
Date: September 2nd, 2020
An economy in long-run equilibrium experiences an increase in aggregate demand. According to the classical model, A) the price level will increase, but real GDP will not change. B) the price level and real GDP will increase at the same time. C) the price level will increase, but real GDP will decrease. D) the price […]
Date: September 2nd, 2020
The consumption function shows how much A) households plan to consume per year at each possible interest rate. B) real disposable income people will earn at each income tax bracket. C) households plan to consume per year at each level of real disposable income. D) households plan to consume per year at each level of […]
Date: September 2nd, 2020
