What does full employment mean?
(A) There is no cyclical unemployment.
(B) Those who want to work have full-time jobs.
(C) Every person who wants to work has a job.
(D) Approximately 80 percent of people have jobs.
Ans: (A) There is no cyclical unemployment.
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One reason why the demand for gasoline is inelastic is because
A) substitutes for gas abound. B) substitutes for gas are hard to find. C) gasoline is a luxury item. D) people have a long time to shop around for automobiles that use less gas. E) buses run on diesel fuel rather than gasoline.
What do Keynesians mean when they say that "you can't push on a string"?
A) An increase in the supply of goods does not really create its own demand. B) If the government reduces taxes in an attempt to increase household consumption, it will not always work. C) An increase in the money supply will not always stimulate the economy. D) If the government wants to get something done, the best way is not to force the issue, but to offer incentives. E) If the government puts too much expansionary pressure on the economy, it will probably "overheat."
If a product has several good substitutes, demand for the product is most likely to be:
A. very inelastic. B. inelastic. C. unit elastic. D. elastic.
Which of the following is NOT an assumption of the classical model?
A. People are motivated by self-interest. B. Government spending is necessary to achieve economic stability. C. Wages and prices are flexible. D. Absence of money illusion.