The negative impacts of high income inequality on the society will be less significant if
A. the poor believe that their poverty is a result of choices they made.
B. there is a high level of political influence in the working of the income-distribution system.
C. those at the bottom of the income distribution believe that the system is rigged in favor of the rich.
D. those at the high end of the income distribution are not motivated to hold their positions.
Answer: A
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If disposable income increases by $100 million, and consumption increases by $90 million, then the marginal propensity to consume is
A) 0.9. B) 0.8. C) 0.75. D) 0.6.
How can nations fix their exchange rates?
a. Either by imposing strict exchange controls or by setting interest rates at the same level as the country with which they want to fix the exchange rate. b. Either by imposing strict exchange controls or by keeping inflation at the same rate as the country with which they want to fix the exchange rate. c. Nominal exchange rates cannot be fixed. d. Either by imposing strict exchange controls or by obligating the central bank to intervene in the foreign exchange market to keep the exchange rate at its chosen rate. e. Either by keeping inflation at the same rate or by setting interest rates at the same level as the country with which they want to fix the exchange rate.
How do you interpret the value of income elasticity?
What will be an ideal response?
Refer to the information provided in Table 20.6 below to answer the question(s) that follow.
Table 20.6
Refer to Table 20.6. If the exchange rate is $1 = 1 euro, then
A. the United States will import both peas and carrots. B. France will import carrots. C. France will import both peas and carrots. D. the United States will import carrots and France will import peas.