In a market economy, which of the following determines the answer to the WHAT to produce question?
A. Government directives.
B. A democratic vote by all consumers.
C. Prices and profit.
D. Direct negotiations between consumers and government.
Answer: C
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Why might Congress benefit from the Fed being self-financed?
A) Self-financing increases Congressional control over the Fed. B) Self-financing reduces the Fed's exposure to external pressures. C) Self-financing gives the Fed an incentive to expand the money supply, which ultimately results in Congress having additional funds to spend. D) Congress does not benefit from the Fed being self-financed; Congress is obliged by the Constitution to allow the Fed to be self-financed.
The theory of rational expectations states that
a. expected inflation will be no different from actual inflation, on average. b. expectations are based on all possible information. c. individuals always act optimally. d. expected inflation will be lower than actual inflation.
The actual time length of the short run is determined by when diminishing marginal returns start
Indicate whether the statement is true or false
Assume that the marginal propensity to consume equals 0.75 and the marginal propensity to import equals 0.10 . By how much does spending on domestic goods increase if income increases by $300?
a. $195 b. $225 c. $30 d. $300 e. $75