Answer the following questions true (T) or false (F)
1. Mortgage-backed securities are groups of mortgages that are bundled together and sold to investors.
2. Economies cannot function without money.
3. If gold is used as money in an economy, the money supply is easy to control.
1. TRUE
2. FALSE
3. FALSE
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Assuming fixed costs are positive, over a range of output in which average total costs were constant,
a. average variable costs would be constant as output increases. b. average variable costs would be falling as output increases. c. average variable costs would be rising as output increases. d. marginal cost would be less than average variable cost.
Politicians tend to prefer
a. expansionary fiscal policy over contractionary policy. b. contractionary fiscal policy over expansionary policy. c. both contractionary and expansionary fiscal policy. d. discretionary fiscal policy over expansionary policy.
On a graph we draw a consumer's budget constraint, measuring the number of pineapples on the horizontal axis and the number of pencils on the vertical axis. If the slope of the budget constraint is -6, then
a. a pineapple costs six times as much as a pencil. b. the opportunity cost of a pineapple is 6 pencils. c. the opportunity cost of a pencil is one-sixth of a pineapple. d. All of the above are correct.
Which of the following is included in the investment component of GDP?
a. spending on new business equipment such as power tools and spending on stocks and bonds b. spending on new business equipment such as power tools but not spending on stocks and bonds c. spending on stocks and bonds but not spending on new business equipment such as power tools d. neither spending on new business equipment such as power tools nor spending on stocks and bonds