A rise in aggregate expenditure is always
a. smaller than the rise in income that causes it
b. larger than the rise in income that causes it
c. the same as the rise in income that causes it
d. smaller than the increase in consumer spending that causes it
e. smaller than investment spending
A
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In Figure 3-2, a move from a point like B to a point such as D
A. is not possible. B. can be attained with a more efficient allocation of resources. C. can be attained if there is an improvement in technology. D. can be attained if unused resources are put into production.
An incentive system is a
A) method of organizing production that uses a market-like mechanism inside the firm. B) method of organizing production that uses a managerial hierarchy. C) set of rules that induce an agent to act in the best interest of a principal. D) method of production that implements an assembly-line process.
Loans made to consumers by finance companies are typically
A) only for the purchase of cars or boats. B) at interest rates below those charged by banks for the same type of loan. C) at interest rates above those charged by banks for the same type of loan. D) not made for less than $10,000.