The amount of money people wish to hold shows an inverse relationship to
A. the income tax rate.
B. the interest rate.
C. their planned near-term purchases.
D. the money supply.
Answer: B
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A negative externality exists and government wants to impose a per-unit tax in order to bring about the socially optimal output. To accomplish its objective, government must set the tax equal to marginal
A. private cost. B. social benefit. C. external cost. D. social cost. E. private benefit.
When advertising enhances the ability of markets to allocate resources, it is most likely: a. manipulating people's tastes
b. increasing the brand loyalty of existing customers. c. advertising about the existence of new products. d. addressing psychological, rather than informational, characteristics of a good.
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and the monetary base in the context of the Three-Sector-Model? a. Real GDP rises and monetary base falls
b. Real GDP falls and monetary base rises. c. Real GDP and monetary base fall. d. Real GDP and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which of the following individuals would not be included in the labor force?
A. Kit, who has retired and is not looking for work. B. Divy, who is on temporary layoff from General Motors. C. Soraya, a recent college graduate, who does not have a job, but has applied for several in the last week. D. Giles, a physician who chooses to work part-time.