Exhibit 8-8 Consumption function
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In Exhibit 8-8, which of the following could cause the movement from C1 to C2?
A. higher wealth
B. higher interest rates
C. higher taxes
D. a technological breakthrough
Answer: A
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If the yield curve slope is flat for short maturities and then slopes steeply upward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future. B) constant short-term interest rates in the near future and further out in the future. C) a decline in short-term interest rates in the near future and a rise further out in the future. D) constant short-term interest rates in the near future and a decline further out in the future.
Refer to the information above. What is the value of the exponent for uneducated labor (L)?
A) 0.75 B) 0.40 C) 0.35 D) 0.15
A period of decline in total output, income, employment, and trade, lasting six months or longer, is defined as a:
A. trough. B. secular trend. C. business cycle. D. recession.
If an economy is producing on its production possibility frontier but is not producing what people want, the economy
A. is not achieving output efficiency. B. is experiencing technological advancement. C. is producing at more than one point on the production possibility frontier. D. is not being productively efficient.