Economics

Jacob buys less soda when the price of soda rises 10 percent, while th

Jacob buys less soda when the price of soda rises 10 percent, while the prices of all other goods also rise 10 percent. Jacob is A) behaving in accordance with classical economic theory. B) worrying too much about a coming recession. C) suffering from money illusion. D) paying too much attention to changes in relative […]

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Date: September 2nd, 2020

When interest rates rise, A) borrowing costs decline, and total plann

When interest rates rise, A) borrowing costs decline, and total planned real expenditures decline. B) borrowing costs increase and total planned real expenditures increase. C) borrowing costs decline, and total planned real expenditures increase. D) borrowing costs increase, and total planned real expenditures decline.   ANSWER D

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Date: September 2nd, 2020

Money illusion is A) when people think they are better off when their

Money illusion is A) when people think they are better off when their income increases even though prices have increased by the same amount. B) when people are motivated by self-interest. C) could not exist if the economy did not have competitive markets. D) a basic condition that all classical economists assume people have.   […]

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Date: September 2nd, 2020

Investment includes spending on A) capital goods, buildings, and chan

Investment includes spending on A) capital goods, buildings, and changes in business savings. B) capital goods, buildings, and changes in business inventories. C) capital goods, buildings, and consumer durable goods. D) capital goods, consumer durable goods, and changes in business inventories.   ANSWER B

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Date: September 2nd, 2020