An asset is liquid if
A) it earns interest.
B) it is backed by a government guarantee.
C) it can be exchanged for other items of value without high transaction costs.
D) All of the above are correct.
C
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If the demand for iPods is price elastic, then
A) the percentage change in quantity demanded is equal to the percentage change in price. B) the percentage change in quantity demanded is less than the percentage change in price (in absolute value). C) quantity demanded is not responsive to changes in price. D) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value).
The narrowest definition of the money supply is
A) M1. B) M2. C) the difference between M2 and M1. D) the sum of M1 and M2.
Which of the following is not a coincident indicator of the business cycle?
a. Unemployment claims b. Payroll employment c. Industrial production d. Personal income e. Manufacturing and trade sales
The simple circular-flow model for households and firms is an economic model that focuses on the interaction between households and firms. Which of the following statements regarding the model is correct?
a.) the model is missing the interaction between firms and the resource market. Therefore, it cannot predict well. b.) the model is missing the interaction between households and the product market. Therefore, it cannot predict well c.) the model has too many simplifying assumptions, and it cannot be used to make predictions about the real world d.) the model is a simplification of the real world, and it can be used to make predictions about the real world e.) the model is missing the interaction between firms and the produce market. Therefore, it cannot predict well