Saving is
a. the sum of the funds people hold in their checking accounts.
b. after-tax income that is not spent on consumption.
c. always equal to consumption.
d. equal to disposable income plus consumption.
B
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Which of the following would most likely increase the demand for televisions?
a. A decrease in the price of televisions. b. A decline in consumer income. c. A decrease in the price of home stereo systems, a substitute for televisions. d. A decrease in the price of DVD players, a product that is complementary with televisions.
The main explanation for why the cheap foreign labor argument is a poor reason for restricting international trade is that:
A. workers who get paid less tend to have lower productivity than those who get paid more. B. all firms and workers gain when there are no restrictions on international trade. C. infant industries such as steel and automobiles need to be protected. D. specialization and free trade usually raise the prices of all the traded goods, so that the workers can get paid more.
Which of the following is a common mistake consumers commit when they make decisions?
A) They take into account nonmonetary opportunity costs but ignore monetary costs. B) They are overly pessimistic about their future behavior. C) They fail to ignore sunk costs. D) They sometimes value fairness too much.
Effectively managing aggregate demand in order to stabilize nominal GDP requires
A) policy makers to know the size of the gap between current demand and demand at equilibrium. B) only that policy makers know what level of aggregate demand is necessary for full employment. C) successful economic forecasting. D) that nominal GDP be the same as real GDP. E) very little information about the economy because the market system is an efficient generator of high-quality information.