What is a free rider?
a) a person who will only purchase a product on sale
b) a person who receives a benefit of a good but avoids paying for it
c) a person who can produce a good at no extra cost
d) a person who takes advantage of tax loopholes to lower his taxes
Ans: b) a person who receives a benefit of a good but avoids paying for it
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The expenditure multiplier is greatest when the
A) LM curve is positively sloped. B) LM curve is horizontal. C) IS curve is vertical. D) LM curve is vertical.
A bond’s price is sensitive to changes in
A. the interest rate. B. the accepted rate of return on investment. C. investor confidence in the stability and credit worthiness of the firm. D. All of these responses are correct.
Refer to the graph shown. What will reduce the trade deficit?
A. The SAS curve shifts down. B. The WAS curve shifts up. C. The AD curve shifts to the left. D. All the answers are correct.
A weaker dollar:
A. raises inflation and expands the economy. B. reduces inflation and expands the economy. C. reduces inflation and contracts the economy. D. raises inflation and contracts the economy.