What is the real value of money?
A. its face value
B. its compounded earnings in banks
C. the quantity of goods it can buy
D. the ability of shop at market prices
Answer: C
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Assume General Motors has decided to build an assembly plant in St. Louis. The plant will employ 1,000 full-time workers at an annual wage of $40,000 each. If the marginal propensity to consume in St. Louis is 2/3, what change in income will result from operation of the plant for one year?
a. $26.7 million. b. $40 million. c. $80 million. d. $120 million.
The creation of private property rights corrects negative externality problems in many cases because they
a. cannot create negative externalities b. create a strong incentive for the private owners to maintain the property c. can force the government to compensate the owners for the externality costs d. encourage people to become free riders e. always lead to the social optimal price and output levels
Based on the graph showing the crowding-out effect, due to the crowding-out effect, the economy ______ its full potential output.
a. cannot stay at
b. exceeds
c. performs exactly at
d. cannot estimate