Which of the following can happen?
a. Prices are rising and the inflation rate is negative but rising.
b. Prices are falling and the inflation rate is positive and falling.
c. Prices are falling and the inflation rate is positive and rising.
d. Prices are rising and the inflation rate is positive but falling.
e. Prices are rising and the inflation rate is negative and falling.
Substitution bias
a. is one factor that causes the Consumer Price Index to underestimate the inflation rate
b. is caused by the poor quality of many products
c. is one of the primary causes of inflation
d. involves consumer behavior that helps explain why the Consumer Price Index
overestimates the inflation rate
e. suggests most economists substitute other price indices for the flawed Consumer
Price Index
All of the following would shift the consumption-income line except
a. an increase in taxes that causes the marginal propensity to consume to change
b. an increase in taxes that changes autonomous spending
c. a change in expectations of future income
d. a change in wealth
e. none of the above
The short-run macro model
a. relies on the market-clearing assumption
b. is used primarily for long-run analysis
c. is used primarily for short-run analysis
d. focuses on the supply of and demand for resources
e. focuses on fluctuations in the financial markets to explain fluctuations in real GDP
The demand curve facing a firm shows the
The study of how consumers and producers interact in individual markets is
Talking loudly in a library creates
When explaining expansions and recessions, the classical model is
a. reliable
b. seriously flawed
c. the favorite explanatory tool of economists
d. overly focused on the labor market
e. sometimes accurate and sometimes not
In calculating total spending, after adding together Consumption, Investment, and
Government Purchases, we must
a. add imports and subtract exports
b. add exports and subtract imports
c. compute net consumption and net investment by subtracting products produced
abroad
d. compute net consumption and net investment by adding products produced abroad
e. compute net consumption and net investment by add products consumed abroad
If the percentage change in quantity demanded divided by the percentage change in
price equals 1, then
Total spending will equal total output
a. after inventory adjustments
b. only when total leakages are equal to total injections
c. by the end of every year
d. only when the sum of saving and investment equals the sum of net taxes and
government expenditures
e. saving is equal to net taxes
A buyer’s consumer surplus on a unit of a good is its value to that buyer minus the
market price.
Which of the following events led to the debate over the applicability of the classical
model?
a. World War II
b. World War I
c. Korean War
d. The Great Depression
e. The Great Society