At higher rates of interest A) businesses demand more investment because there are more funds available to invest. B) businesses demand more investment because future profitability is likely to be greater. C) households save more because they get a greater return on their savings. D) households save less because it is more expensive to save. […]
How does aggregate demand curve (AD) differ from an individual demand curve (D)? A) AD is generally vertical while D is usually downward sloping. B) D represents the price-quantity relationship for a single good or service while AD looks at the entire economic system. C) AD is generally a downward sloping curve while D usually […]
Fiscal policy is defined as A) the discretionary changing of government expenditures and/or taxes to achieve national economic goals. B) the design of a tax system to transfer income from the rich to the poor. C) the use of the taxing power of the government to redistribute wealth in a socially acceptable manner. D) the […]
Empiricism is analysis that uses ________ to test theories. A) data B) illustrations C) value judgments D) philosophy ANSWER A
Suppose the market for cement is such that the government does not interfere in price determination but plays an important role in the provision of property rights. While there are a large number of buyers and sellers, everyone conducts transactions at a common market price. Which of the following statements is true about the structure […]
Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this seller will: A) increase his sales. B) lose only a few buyers. C) increase his profit. D) lose almost all of his buyers. ANSWER D
The consumption function shows the relationship A) between households’ disposable income and their consumption spending. B) between consumption spending and capital gains. C) between government spending and tax collection. D) between investment and rate of return. ANSWER A
Which of the following is a discretionary fiscal policy action? A) a progressive tax system that leads to an increase in income tax revenues during an economic boom B) a deliberate tax cut when the economy experiences high unemployment C) an increase in the amount of unemployment compensation because more people become unemployed D) an […]
Which of the following are mentioned as forces of the new growth theory that influence economic growth? I. Technology II. Research III. Innovations A) II and III only B) I only C) I, II, and III D) I and II only E) I and III only ANSWER C
A seller who is a price taker charges: A) above the market price. B) different prices to different buyers. C) the market price. D) below the market price. ANSWER C
