Which statement best characterizes the classical economists' view of saving and investment?
A. Saving exceeds investment.
B. Saving is less than investment.
C. Saving equals investment.
D. Saving and investment are not related to one another.
Answer: C
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Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 illustrates his marginal benefit of staying open for each additional hour. Suppose that we observe Joe staying open 5 hours per day
If he is following the marginal principle, what must his marginal cost per hour be? A) $16 B) $24 C) $32 D) $40
Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?
a. Permanent tax cuts have a greater effect on expected long-run inflation. b. Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective. c. Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function. d. Permanent tax cuts affect expectations of long-run income more than temporary tax cuts.
If a hurricane were to wipe out the majority of the eastern seaboard in the United States, it would likely cause a:
A. short-run supply shock. B. long-run supply shock. C. long-run demand shock. D. short-run demand shock.
A country has output of $600 billion, consumption of $350 billion, government expenditures of $90 billion and investment of $60 billion. What is its supply of loanable funds?
a. $160 billion b. $150 billion c. $60 billion d. $30 billion