In some markets for used goods:
A. the seller has more information than the buyer about the quality of the good.
B. the buyer has more information than the seller about the quality of the good.
C. low-quality used goods will be underpriced.
D. the quality of used goods sold in the market will typically rise over time.
Answer: A
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If a budget deficit increases interest rates, it is possible that investment will
a. fall, leading to a larger capital stock. b. fall, so that there is a smaller capital stock. c. rise, because investment is directly related to interest rates. d. rise, because investment is more attractive when interest rates are higher.
What stage of the business cycle would be most appropriate to describe the years from 1929 to 1933?
(A) A contraction (B) A peak (C) An expansion (D) A trough
If the marginal propensity to consume (MPC) is 0.75 and there is an increase in planned investment spending of $1 trillion, then saving will
A. increase by $0.5 trillion. B. increase by $1 trillion. C. increase by $1.5 trillion. D. remain unchanged.
The aggregate demand curve or schedule shows the relationship between the total demand for output and the:
A. Income level B. Interest rate C. Price level D. Real GDP