In the short-run macro model, an increase in government spending
a. may reduce real GDP
b. partially crowds out private investment spending
c. usually crowds out exports
d. usually crowds out spending on services
e. requires an increase in taxes
If the actual real wage exceeds the equilibrium wage, there will be an excess supply of
labor.
In the aggregate demand-aggregate supply model, an increase in the price level will
a. increase money demand, raise the interest rate, reduce aggregate expenditure, and
decrease equilibrium real GDP
b. decrease money demand, lower the interest rate, increase aggregate expenditure, and
increase real GDP
c. increase the money supply, lower the interest rate, increase aggregate expenditure,
and increase real GDP
d. decrease the money supply, raise the interest rate, reduce aggregate expenditure, and
decrease real GDP
e. not change money supply, money demand or the interest rate, but will shift the
aggregate demand curve to the right
The table below shows the present value of beds for a city hospital, at different interest
rates. For either interest rate, notice that the present value of each additional bed is less
than the present value of the previous bed. What most likely accounts for this fact?
The United States economy has achieved the target rate of unemployment, as set by the
Full Employment and Balanced Growth Act (1978), for most years over the last few
decades.
Market failure occurs when
An externality is defined as
If prices (as measured by the CPI) tripled and nominal wages tripled, what would
happen to real wages?
a. They would triple.
b. They would remain unchanged.
c. They would increase by one-third.
d. They would decrease by one-third.
e. They would increase by a factor of nine.
One reason why financial intermediaries are beneficial is that
a. they can predict the pattern of the outflow of funds
b. they earn a profit
c. there are a variety of financial intermediaries
d. they reduce the risk to depositors by spreading loans among different borrowers
e. they charge high interest rates on funds they lend to depositors
Producer surplus for a particular unit of a good is the price the seller receives for that
unit minus the largest amount the seller would accept for it.
When considering the demand for money, which two assets do we assume individuals
can hold?
a. Stocks and bonds
b. Money and stocks
c. Money and bonds
d. Checking accounts and savings accounts
e. Money and real estate
Under a capitalist economic system,