Leo is a welfare recipient who qualifies for two means-tested cash benefit programs. If he does not earn any income, he receives $225 from each program. For each dollar he earns (which his employer is required to report to the welfare agency), his benefit from each program is reduced by 75 cents until the benefit equals zero. When Leo's earnings are less than $300, each extra dollar he earns causes his total income (earnings plus benefits) to:
A. fall by 50 cents.
B. fall by 25 cents.
C. rise by 50 cents.
D. rise by 75 cents.
Answer: A
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Over time, a country's real GDP per capita typically
A) shrinks B) grows. C) increases and decreases randomly. D) remains stable.
A small country is an international borrower and its domestic supply of loanable funds increases. Consequently, the equilibrium quantity of loanable funds used in the country ________ and the country's international borrowing ________
A) does not change; decreases B) does not change; does not change C) does not change; increases D) increases; does not change
The Fed's interest rate response to the rising output ratio experienced from 1997 to 1999 is explained by
A) beneficial supply shocks which pushed down the inflation rate. B) the Fed's efforts to help end the Asian financial crisis C) the Fed's uncertainty about the concepts of the natural level of output and natural rate of unemployment. D) All of the above.
At a given point in time, if the demand for money increases: a. the interest rate will fall
b. there will be a movement downward along the money demand curve. c. there will be a movement upward along the money demand curve. d. there will be a rightward shift of the money demand curve. e. there will be a leftward shift of the money demand curve.