Refer to the production possibilities curve. At the onset of the Second World War, the Soviet Union was already at full employment. Its economic adjustment from peacetime to wartime can best be described by the movement from point:
A. c to point b.
B. b to point c.
C. a to point b.
D. c to point d.
A. c to point b.
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An increase in expected future disposable income ________ consumption expenditure and ________
A) increases; shifts the consumption function downward B) increases; shifts the consumption function upward C) decreases; shifts the consumption function upward D) increases; results in a movement upward along the consumption function E) decreases; shifts the consumption function downward
Adverse selection in insurance markets results in missing markets because people engage in riskier behavior once they are insured.
Answer the following statement true (T) or false (F)
An increase in money supply causes the real interest rate to ________ and output to ________ in the short run, before prices adjust to restore equilibrium
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
If the demand of U.S. dollars drops sharply
A. the dollar will depreciate in value. B. foreigners holding U.S. assets will suffer tremendous losses. C. Americans will have to pay a lot more for imported goods. D. All of the choices are true.