Recent Question

Over the long run the most important determinant of our standard of living is 38 1. "Domestic investment did not fall as sharply as did national saving because ......." Complete this clipping. a) private saving increased b) the government deficit shrank c) businesses borrowed at higher cost d) businesses borrowed from foreigners 2. Suppose income is $700b, consumption is $500b, taxes are $60b, and government spending is $80b. Natio ...

Other / Other 07 May 2016

The International Monetary Fund said Spain’s economy is likely to contract 1. ”The International Monetary Fund said Spain’s economy is likely to contract by “at least” 1% in 2009, and called on the government to …..” This clipping is best completed with a) increase government spending b) increase taxes c) balance its budget d) decrease unemployment benefits ”Efforts to encourag ...

Other / Other 07 May 2016

China could be the savior of the American economy by 1. “There is growing optimism that the economy is heading for recovery, based on a slowing decline in inventories.” A slowing decline in inventories creates optimism because it results from a) higher aggregate demand or lower aggregate supply b) higher aggregate demand or higher aggregate supply c) lower aggregate demand or lower aggregate supply d) lower aggregate d ...

Other / Other 07 May 2016

When comparing an increase in government spending on goods and services 1. An economist claims that a government fiscal policy to increase income by $2b will not create much upward pressure on prices. He/she must believe that the a) aggregate supply curve is flat b) aggregate demand curve is flat c) aggregate supply curve is steep d) aggregate demand curve is steep 2. The Laffer curve a) shows how the tax rate affects GDP b) shows ...

Other / Other 07 May 2016

They don't seem to be getting the underlying message in the country's failures in domestic and international markets 1. "Although the Americans talked boldly about boosting investment, they mainly ducked the question of how to boost America's low rate of ______. To finance higher investment America would have to increase _______ or slash _______." Fill in the blanks. a) saving; taxes; government spending b) saving; government spending; ...

Other / Other 07 May 2016

This produces bad news later for Japan 1. "Analysts point out, however, that production schedules for December were planned several months in advance, and were likely set before consumer spending began to show signs of weakness. Although in any given month a big rise in production coupled with weak consumer spending isn't a problem, if it happens repeatedly inventories will _____, and factories will _____." The blanks are best filled with ...

Other / Other 07 May 2016

This behavior causes the multiplier to become 1. An increase in our borrowing from foreigners a) is usually caused by a fall in our interest rate b) is unquestionably a burden on future generations c) happens when our bond prices are relatively high d) lets current-generation citizens obtain more than full-employment output 2. “Research suggests that when the ratio of public debt to GDP is high, the multiplier effect of fi ...

Other / Other 07 May 2016

Which of the following should lead to a rise in economic activity 1. According to Keynesian theory, how will increasing government spending when unemployment is 10% have a different effect from a similar increase when unemployment is 5%? a) At 10%, it is more likely to increase prices than real output. b) At 5%, it is more likely to increase real output than prices. c) At 10% it is more likely that it will require a sacrifice of pri ...

Other / Other 07 May 2016

Low saving makes it harder to increase living standards 1. "Economist McKenzie attacks both American political parties' attraction to what he calls 'jobilism' - trying to create jobs mostly by protecting current jobs, thence reducing churn." Protecting current jobs is a) good because it avoids inflation b) good because it promotes efficiency c) bad because it creates unemployment d) bad because it inhibits productivity growth 2. "Li ...

Other / Other 07 May 2016

To prevent this action from having any impact on GDP Suppose that last year consumption was $570 billion, tax receipts were $240 billion, and income was $900 billion. The corresponding numbers for this year are $600 billion, $250 billion and $950 billion. 1. The MPC (marginal propensity to consume out of disposable income) is a) 0.7 or less b) more than 0.7 but not more than 0.8 c) more than 0.8 but not more than 0.9 d) more than 0.9 ...

Other / Other 07 May 2016