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
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
