If the Real GDP increases from one year to the next, we could conclude the country experienced:
A. definite inflation and may have experienced an increase in output.
B. a definite increase in output and may have experienced an increase in prices.
C. inflation and no change in output.
D. an increase in output and no change in prices.
Answer: B
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Suppose that medical researchers discover a new drug which slows the aging process allowing the average life span in the United States to increase to 95 years of age. The lifecycle hypothesis suggests that
A) consumption spending would increase since lifetime income increases. B) consumption spending would increase since estimates of permanent income would increase. C) consumption spending would decrease since savings would rise to provide income for the longer retirement periods. D) None of the above is correct since predicted future annual incomes may not change.
What criteria do consumers apply when deciding whether or not to consume
a. The consumer would consume only if the price is lower than his highest willingness to pay b. The consumer would only consume if his surplus is greater than zero c. The consumer would only consume if the price is higher than his highest willingness to pay d. Both A&B
The less liquid markets are the:
A. less willing people are to save, and the higher the interest rates. B. more willing people are to save and the higher the interest rates. C. less willing people are to save, and the lower the interest rates. D. more willing people are to save, and the lower the interest rates.
The imposition of a binding price ceiling on a market causes quantity demanded to be a. greater than quantity supplied. b. less than quantity supplied
c. equal to quantity supplied. d. Both (a) and (b) are possible.