The difference between savings and saving
A. is called money illusion.
B. is that savings occurs when consumption does not and saving is used to purchase consumption goods.
C. is that savings is measured in real terms while saving is measured in nominal terms.
D. is that savings is a stock concept and saving is a flow concept.
Answer: D
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The period of time in which the level of output moves from a trough to a peak is called a
A) contraction or recession. B) recovery or expansion. C) plateau. D) depression.
If the Federal Reserve buys $500 of government securities when the required reserve ratio is 20 percent, the maximum potential change in the money supply is a(n)
A) increase by $100. B) increase by $2,500. C) decrease by $100. D) decrease by $2,500.
The magnification of small changes in spending into larger changes in output and income is produced by:
A. the average propensity to consume. B. saving. C. the multiplier effect. D. the average propensity to save.
Excess demand generally causes prices to fall.
Answer the following statement true (T) or false (F)