Which of the following is most important for the growth of income and full realization of an economy's potential?
a. a positive rate of time preference that motivates a high rate of current consumption
b. low real interest rates
c. the use of central planning to allocate investment funds
d. a mechanism capable of attracting savings and channeling them into investment projects that create wealth
D
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Assume that coffee and tea are substitutes. When the price of coffee increases
A) the supply of tea increases. B) the demand for tea decreases. C) the demand for tea increases. D) the supply of tea decreases.
In the above figure, point ________ shows an equal distribution of income, while point ________ shows an unequal distribution of income
A) a, b B) b, c C) b, a D) a, d
The "excess" growth rate of the money supply is the growth rate of money
A) plus the long-run growth rate of velocity. B) minus the long-run growth rate of velocity. C) plus the long-run growth rate of real GDP. D) minus the long-run growth rate of real GDP.
An increase in taxes
a. reduces income by more than the total fall in consumption. b. reduces income by the same amount as the total fall in consumption. c. reduces income and consumption by the same amount as taxes fall. d. reduces income by the amount of the initial fall in consumption.