“Rising prices” and “rising inflation” mean the same thing.
If autonomous consumption decreases, which of the following is the most likely effect
in the short run?
a. a decrease in output, an increase in money demand, and an increase in the interest
rate
b. an increase in output, a decrease in money demand, and a decrease in the interest rate
c. a decrease in output, a decrease in money demand, and a decrease in the interest rate
d. an increase in output, an increase in money demand, and a decrease in the interest
rate
e. an increase in output, an increase in money demand, and an increase in the interest
rate
Suppose that after disposable income increases by $500 billion, consumption
expenditures increase by $450 billion. Therefore, the marginal propensity to consume
would be
a. 1.11
b. 9.00
c. 0.09
d. 0.90
e. 0.82
When households and businesses interact in product markets goods and services are
The large U.S. government budget deficits in the early 1980s were caused by
a. wasteful military spending
b. declining transfer payments triggered by more expenditures on education and
training
c. President Reagan’s attitude toward deficits
d. a recession, expanded military spending, and income tax cuts
e. recessionary gaps in GDP
According to many economists, production that occurs in the underground economy
a. has no market value and therefore should not be included in GDP
b. is given too much weight by the Bureau of Economic Analysis, causing GDP to
overstate true output
c. consists exclusively of illegal production activities such as drug selling and
prostitution
d. is accurately accounted for by the Bureau of Economic Analysis in its measurement
of GDP
e. is given insufficient weight by the Bureau of Economic Analysis, causing GDP
statistics to understate true output
Consider three bonds, from Corporation X, Corporation Y, and Corporation Z. The X
and Y bonds mature in 1 year, while the Z bond matures in 2 years. The Y and Z bonds
have face values of $5,000, while the X bond has a face value of $4,000. If the interest
rate is 10 percent (0.10) per year, rank the three bonds from highest present value to
lowest present value.
If the Ford Motor Company decides to use more robots in its manufacturing plants, the
company is addressing the question of
The exchange rate is
a. the rate at which one currency is traded for another
b. always constant
c. the tax a foreign nation imposes to change its currency into dollars
d. irrelevant to those who do not travel to foreign countries
e. controlled by the Federal Reserve
An increase in the price of a good results in a(n)
In the classical model the interest rate is determined in the money market; in the
short-run macro model the interest rate is determined in the market for loanable funds.
In an Israeli factory, each worker can produce 2/5 of a shirt in an hour or 1/10 of a pair
of pants in an hour. If there are 500 workers in the factory, what is opportunity cost of
producing one pair of pants?
a. 1 shirt
b. 4 shirts
c. 1/2 shirt
d. 1/4 shirt
e. 2 shirts
Income tax reductions can increase the profitability of human capital to households.
In the classical model, investment spending is
a. positively related to the level of income
b. positively related to the interest rate
c. negatively related to the interest rate
d. unrelated to the interest rate
e. negatively related to the price level
Which of the following is an example of nonprice competition?