Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently point out to him that he
a. is correct only when the economy is in a recession
b. has mistakenly inferred causation from observed correlation
c. has ignored secondary effects
d. has committed the fallacy of composition
e. is correct only when the United States enjoys economic growth
B
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Why must the current account and the financial account sum to zero? (Assume the capital account is zero.)
What will be an ideal response?
In addition to
a. performing financial intermediation, banks are important in that they help create a medium of exchange. b. serving as financial markets, mutual funds are important in that they help create a store of value. c. serving as stores of value, stocks and bonds also serve as media of exchange. d. All of the above are correct.
According to Keynesian theory, decreasing taxes and increasing government spending will most likely change consumption expenditures and unemployment in which of the following ways?
A) Decrease/Increase B) Decrease/No change C) Increase/Decrease D) Increase/Increase E) No change/Decrease
"Household production" refers to
A) the manufacturing of durable household products. B) the home building sector of the economy. C) home-based craft businesses. D) goods and services people produce for themselves.