When households hold money for unplanned expenditures and emergencies, it is called
A. the precautionary demand for money.
B. the transactions demand for money.
C. the irrational demand for money.
D. the speculative demand for money.
Answer: A
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According to the textbook, income inequality statistics can be misleading because
A) they are collected by the Census Bureau, whose objectivity cannot be trusted. B) they ignore the income mobility of individual families and households through time. C) they do not take into account inflation. D) they fail to be of use in policy proposals and debates.
National income includes wages and salaries, interest and rent, but not corporate profits
a. True b. False Indicate whether the statement is true or false
A sharp increase in stock prices makes people much wealthier. If the main effect of this increased wealth is felt on labor supply, what happens to current employment and the real wage rate?
A. Both employment and the real wage rate would increase. B. Both employment and the real wage rate would decrease. C. Employment would increase and the real wage would decrease. D. Employment would decrease and the real wage would increase.
The crowding-out effect from government borrowing to finance the public debt is reduced when:
A. The economy is experiencing a period of high inflation B. The economy is operating at the full-employment level of output C. Public investment complements private investment D. Public investment substitutes for private investment