According to Keynesian theory, the most important determinant of saving and consumption is
A) the stock of durable goods in the consumer's possession.
B) the stock of liquid assets.
C) the level of real disposable income.
D) the level of consumer indebtedness.
C
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The government has decided to give every person in the U.S. a $5 coupon that they can use at the grocery store to purchase their choice of cheese. We would expect this policy to lead to
A) an increase in aggregate demand but not equivalent to the full impact of all of the coupons redeemed due to some direct expenditure offset. B) no increase in aggregate demand because there would be no direct expenditure offset. C) an increase in aggregate demand equivalent to the full impact of all of the coupons redeemable. D) no increase in aggregate demand due to the Ricardian equivalence theorem.
Which of the following is likely to be a government objective?
a) Lower unemployment b) Negative economic growth c) Very high inflation d) A recession
Production possibilities curves:
A) illustrate the production choices available to an economy. B) assume full employment but not maximum efficiency. C) assume maximum efficiency but not full employment. D) are used to illustrate the law of decreasing opportunity costs.
What would lead an economist to conclude that Theory A is superior to Theory B?
A. Theory A explains how people think, whereas Theory B only explains what they do. B. Theory A is based on the assumption that an individual typically cannot determine what is in his or her own best interest, whereas Theory B assumes that each person knows what is in his or her own best interest and acts accordingly. C. The assumptions underlying Theory A are more realistic than are the assumptions underlying Theory B. D. Theory A predicts real-world events better than does Theory B.