In the classical model, an increase in aggregate demand will lead to an increase in wage rates while a decrease in aggregate demand will A) change the price of capital. B) leave wages unchanged since workers will not take a cut in pay. C) increase wages since business will be desperate for labor. D) decrease […]
Date: September 2nd, 2020
According to the permanent income hypothesis, a temporary increase in income that does not affect average lifetime income would A) cause no change in consumption. B) cause a decrease in consumption and saving by the same amount. C) cause an increase in consumption and saving by the same amount. D) cause a large increase in […]
Date: September 2nd, 2020
Innovation typically increases when A) high taxes are present. B) the legal system is weak. C) government controls the resource base. D) market incentives and private property rights are encouraged. ANSWER D
Date: September 2nd, 2020
The interest rate effect suggests that A) an increase in the price level decreases the interest rate, which causes businesses and consumers to reduce desired spending. B) an increase in the price level increases the interest rate, which causes businesses and consumers to reduce desired spending. C) an increase in the price level increases the […]
Date: September 2nd, 2020
The total of all planned expenditures in the entire economy is the definition of A) production possibilities curve. B) aggregate demand. C) net domestic product. D) aggregate supply. ANSWER B
Date: September 2nd, 2020
Economists typically agree that the special protection given to owners of patents tends to A) reduce economic growth. B) reduce productivity. C) reduce expenditures on research and development. D) increase expenditures on research and development. ANSWER D
Date: September 2nd, 2020
According to Keynes, an individual’s level of saving is primarily determined by A) the individual’s current level of disposable real income. B) the individual’s assessment of the future direction of the stock market. C) real Gross Domestic Product (GDP) for the economy. D) the interest rate. ANSWER A
Date: September 2nd, 2020
Which of the following best describes the difference between a demand curve and a demand schedule? A) A demand curve shows different quantities of a good demanded at different prices, whereas a demand schedule shows different quantities of a good demanded at different incomes. B) A demand curve can be derived from a demand schedule, […]
Date: September 2nd, 2020
The classical model makes little distinction between the long run and short run because A) wages and prices adjust so fast that the economy is quickly moving towards the long run. B) the model has not been fully developed yet. C) current changes influence the long run, so it is not possible to plan for […]
Date: September 2nd, 2020
The aggregate demand curve gives the A) planned purchase rates for all goods and services in the economy at various price levels. B) demand for goods and services by the government at various price levels. C) amount of all goods everyone wants to buy at various income levels. D) planned purchases for all goods and […]
Date: September 2nd, 2020
