In the closed economy IS-LM model, an increase in government spending crowds-out
a. prices.
b. the money supply.
c. consumption.
d. investment.
e. both c and d.
D
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Refer to Figure 2-10. If the economy moves from point C to point B, then which of the following statements is correct?
a. The economy benefited from a technological advance in the production of baseballs. b. The opportunity cost of each additional baseball is 2 bananas. c. The opportunity cost of each additional banana is 2 baseballs. d. The move involves no opportunity cost; it simply reflects the desires of the economy's citizens.
In a market economy, every real transaction has a corresponding:
A. financial liability. B. real asset. C. financial transaction. D. real liability.
The legal system provided by the government is necessary for the smooth working of markets because
A) it keeps criminals off of the streets. B) it defines and protects property rights. C) it is set up in the U.S. constitution. D) it ensures that producers maximize their profits.
The transactions demand for money refers to
A) the demand to hold money for use in planned purchases. B) the demand to hold money as a long-term store of value. C) the desire for income. D) the desire for wealth.