Which of the following statements is not true about the consumption function?
A. It shows how consumption is influenced by disposable income.
B. The equation is written as C = a + bYD.
C. It indicates that consumption is inversely related to disposable income.
D. It indicates the rate of consumer spending that will take place at various disposable income levels.
Answer: C
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Financial intermediaries are
A) institutions that regulate financial instruments. B) organized exchanges where currencies are traded. C) organized exchanges where securities and financial instruments are bought and sold D) institutions that make loans to borrowers and obtain funds from savers.
The combination of shocks hitting an economy is:
A. usually known to policymakers before they decide what action to take. B. hard to see without looking at lots of economic data. C. difficult to identify because they are so numerous. D. irrelevant as long as the rates of inflation and real growth are known.
Using a Laspeyres index to calculate the Consumer Price Index (CPI)
A) weights quantities with current prices. B) weights prices with base-year quantities. C) weights quantities with base-year prices. D) weights prices with current year quantities.
Many central banks around the world target an inflation rate of about ________, because of upward bias in measured inflation and to reduce the risk of deflation.
A. 2%. B. -2%. C. 5%. D. 0%.