Which of the following is included in M2?
I. money market mutual funds
II. small-denomination certificates of deposit
A) I only B) II only C) Both I and II D) Neither I nor II
C
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If property rights are not clearly defined and enforced, then
A) incentives for specialization based on comparative advantage are weakened. B) some potential gains from specialization and trade are lost. C) resources are devoted to protecting possessions rather than to production. D) All of the above answers are correct.
Which of the following is not an example of inflation causing a redistribution of income because the inflation was unexpected?
A) Firms have to hire extra workers to change prices because of inflation. B) A firm signs a 4-year contract with a union based on a 3% expected rate of inflation per year, and the actual inflation rate ends up being 5% per year. C) An employee receives an increase in salary that is less than the rate of inflation because management under-predicted inflation. D) A bank collects a lower amount of interest from a loan because inflation was predicted to be 2% but was actually 4%.
When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?
a. the quantities of the goods and services purchased b. the prices of the goods and services c. the goods and services making up the basket d. All of the above are correct.
Which of the following is an example of something that economists would consider a cost but accountants would not?
A. the cost of materials and supplies purchased by a firm B. the salary that the firm actually pays to the firm's owner C. the interest income foregone by the firm's owner because the owner invested funds into the firm D. the cost of advertising