In the classical model, what occurs if a wage of $20/hour results in unemployed workers? A) The wage rate will drop, more workers will be hired, and the unemployment rate falls. B) Producers will quickly create more jobs and hire the unemployed workers, so unemployment is short-lived. C) The workers will go on strike to […]
Which of the following represents the relationship between disposable income (DI), consumption (C), and saving (S)? A) DI = C * S B) DI + C = S C) DI = C – S D) DI = C + S ANSWER D
Individuals will increase their saving as A) the interest rate falls. B) the interest rate increases. C) the rate of unemployment increases. D) business investment falls. ANSWER B
In the classical model, desired saving A) is inversely related to real income. B) exceeds investment. C) is equal to desired investment. D) is less than desired investment. ANSWER C
The long-run aggregate supply curve assumes that A) the unemployment rate is more than 9 percent. B) there is no government purchasing of goods and services. C) only laborers are fully employed. D) all factors of production are fully employed. ANSWER D
In economics, investment is defined as A) disposable income plus consumption. B) disposable income minus consumption. C) the spending by businesses on capital goods and inventories. D) the spending by households on human capital and durable goods. ANSWER C
An increase in human capital will tend to cause which of the following? A) increase labor productivity B) increase the standard of living C) increase economic growth D) all of the above ANSWER D
Why is the long-run aggregate supply curve a vertical line? A) At that level of real GDP, the production costs are at their lowest level. B) At that level of real GDP, production costs have fully adjusted to price changes. C) At that level of real GDP, the unemployment rate is 0 percent. D) At […]
Which of the following is NOT a flow variable? A) saving B) consumption C) investment D) savings ANSWER D
Which one of the following does NOT contribute to economic growth? A) increases in the price level B) the growth of capital and labor productivity C) the growth of the labor force D) the growth of the capital stock ANSWER A
