An increase in a country's rate of inflation is apt to
A. lower its nominal rate of interest and encourage an inflow of capital.
B. decrease demand for the country's currency.
C. reduce its imports and improve its trade balance.
D. worsen its balance of trade and balance of payments.
Answer: D
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In an economy with no government and no international trade, consumption expenditures will be less than the total value of goods and services when
A) people save some of their income. B) people barter rather than use money in making exchanges. C) saving is zero. D) investment is zero.
Fact: The lowest 20% of U.S. family incomes in the U.S. has fallen from 4.8% to 3.8% between 1960 and 2010. Your authors argue that
A) this is clear evidence that the poor have gotten poorer. B) this is primarily the result of a general decline of the power of labor unions in America. C) while their percentage of national income has fallen, real GDP has increased over 4 times during the past 50 years, and so those persons actually earned much more income than before. D) none of the above are true.
During the expansion phase of the business cycle
A) employment decreases. B) unemployment increases. C) production increases. D) income decreases.
Supply-side economics is based on the theory that:
a. budget deficits will stimulate demand, output, and employment. b. budget deficits will lead to higher interest rates, which will weaken their expansionary impact. c. higher tax rates will increase tax revenues. d. increases in aggregate supply lower the price level.