In order to improve living standards for future generations, the economy must
A. sacrifice consumer goods today.
B. reduce its investment goods.
C. increase government spending.
D. reduce growth in the population.
Answer: A
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In a simple model of the economy, if the MPC is 0.8, the multiplier will equal
A) 0.2 B) 0.8 C) 1.25 D) 5
Callie has just graduated from Hairs-R-Us Beauty School with a license to cut hair. She can earn $15 an hour styling hair at the local hair salon or $20 an hour styling hair at the local funeral home. The higher wage offered by the funeral home is an example of
a. a human capital differential. b. a compensating differential. c. signaling theory. d. the superstar phenomenon.
Which of the following is NOT true of a nation's production-possibility curve?
A. Points outside the production-possibility curve are not feasible production points given the resources in the economy. B. The negative slope of the production-possibility curve indicates declining productivity. C. Points inside the production-possibility curve are feasible, but may represent unemployment of some of the economy's resources. D. The production-possibility curve shows all combinations of amounts of different products that an economy can produce when its resources are fully employed.
Suppose that in Mysore, the reserve-deposit ratio is res = 0.5 - 2 i,where i is the nominal interest rate. The currency-deposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand function L(Y, i) = 0.5Y - 10i,where Y is real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money multiplier equals
A. 3.00. B. 2.00. C. 2.40. D. 4.00.