When nominal interest rates are held below inflation rates, then households will have an incentive to
a. consume.
b. save.
c. purchase financial assets.
d. postpone current consumption plans.
a
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The magnitude of the tax multiplier is ________ the magnitude of the government expenditure multiplier
A) greater than B) equal to C) smaller than D) the inverse of E) exactly one half
The cross elasticity of demand is a measure of how
A) responsive consumers are to changes in the price of a product. B) responsive suppliers are to changes in the price of a product. C) demand for a product changes when the price of a substitute or complement changes. D) total revenue changes when the price of a product changes. E) demand for a product changes when income changes.
One argument against using a profit-sharing scheme is the potential for free-riding. In this situation, free-riding refers to
A. one firm using the same contract specifications as another firm. B. a worker not providing effort because his contribution to profit is very small. C. profits being insensitive to worker effort because all increases in profit are returned to the workers due to the profit-sharing scheme. D. the firm not honestly reporting its profits. E. a worker not providing effort because he does not want his coworkers' wages to increase.
As the IS curve becomes flatter, we know that
A) a given change in the money supply will cause a larger change in output. B) a given change in the money supply will cause a smaller change in output. C) a given change in the money supply will cause the same change in output. D) monetary policy becomes less effective.