The capital account includes
A. Foreign purchases of U.S. assets.
B. Unilateral transfers.
C. Trade in goods.
D. Trade in services.
Answer: A
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During the recession phase of the business cycle, households become pessimistic about their future earning capacity as do banks. Nominal interest rates fall during recessions. Mortgage lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest payments. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest payments.
If the supply curve is relatively flat, then the price elasticity of supply will be:
A. relatively large. B. relatively low. C. unit elastic. D. greater than one.
Answer the following questions true (T) or false (F)
1. The level of saving in the economy is equal to the level of income times the marginal propensity to consume. 2. Partial equilibrium refers to the equilibrium level of GDP in the economy. 3. National income is equal to wages, rents, interest and profits.
Which of the following is a statement of positive economics?
a. Too much government spending is the biggest problem facing the U.S. economy. b. Creating jobs is the most serious problem facing the U.S. economy. c. Raising taxes provides additional revenue that should be used to finance health care. d. If taxes are over 50 percent of national income, job creation falls.