The consumption function shows
a. the relationship between consumption and saving
b. the relationship between consumption and real disposable income
c. the relationship between consumption and real income
d. the relationship between consumption and nominal income
e. the relationship between total consumption and consumption for durable goods
B
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In the long run, under perfect competition:
A) firms earn positive economic profit because of economies of scale. B) firms earn positive accounting profit because of government regulations. C) firms earn zero economic profit because of free entry and exit of firms. D) firms earn negative economic profit because of free entry and exit of firms.
The present value of $100 to be received in the year 2014 is
A) less than the present value of $100 to be received in 2015. B) greater than the present value of $100 to be received in 2015. C) the same as the present value of $100 to be received in 2015. D) greater than the present value of $100 to be received in 2015 if the interest rate in 2015 exceeds the interest rate in 2014; otherwise, it is less.
Unemployment is good from a social point of view because
A) it keeps wages in check. B) it allows for better matches between workers and firms. C) it provides free time. D) it keeps the least efficient workers out.
Which of the following is the most frequently used tool of monetary policy?
a. changing the discount rate b. changing reserve requirements c. open market operations d. interest rate changes