A major problem in projecting with a trend line is that
A) only straight-line projections can be accommodated.
B) it is valid only if the trend is upward.
C) it will not forecast turning points in activity.
D) it is a very complex method of forecasting.
C
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Which of the following would cause the U.S. money supply to expand?
a. a commercial bank calling in a loan to build up more excess reserves b. a commercial bank purchasing U.S. securities from the Fed as an investment c. a decrease in reserve requirements d. an increase in the discount rate
Imagine a budget line depicting a consumer's possible allocation of a given income between fruit and vegetables. If the consumer's income increases at the same time the price of vegetables rises, the budget line's intercept with the
a. fruit axis will be unaffected b. fruit axis will move toward the origin c. vegetable axis will be unaffected d. fruit axis will move toward the origin e. vegetable axis might remain unchanged, move toward the origin, or move away from the origin
Figure 33.3 illustrate Lorenz curves for four different economies. Which economy will have a Gini coefficient of zero?
A. A. B. B. C. C. D. D.
A year ago a country reduced the tax rate on all interest income from 40% to 10%. During the year private saving was $600 billion as compared to $500 billion the year before the tax reform. Taxes collected on interest income fell by $150 billion. Assuming no other changes in government revenues or spending which of the following is correct?
a. the substitution effect was larger than the income effect; national saving rose b. the substitution effect was larger than the income effect; national saving fell c. the income effect was larger than the substitution effect; national saving rose d. the income effect was larger than the substitution effect; national saving fell