A higher desired level of capital and investment will result from ________
A) a decrease in productivity
B) a fall in expected future output
C) a depressed economy
D) a booming economy
D
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When the economy enters an expansion of a business cycle, households become more optimistic about expected future disposable income. The increase in optimism leads to
A) a shift upward of the consumption function. B) a movement downward along the consumption function. C) no change in the level of consumption expenditures. D) an increase in consumption expenditures. E) a movement upward along the consumption function.
The price elasticity of output supply is greater in the long run than in the short run.
Answer the following statement true (T) or false (F)
The __________ is used in the book to illustrate avoiding potentially bad news or communication
a. Bear b. Ostrich c. Chicken d. Alligator
Banks, like any other business, face a world of uncertainty and they either make a profit or suffer loss. If the losses become substantial, banks can fail and that occurs when
a. all of their loans are repaid and they cannot loan out their excess reserves b. the legal reserve requirement is raised and they have to curtail the amount of money they can lend c. a large proportion of their loans are not repaid (loans became bad investments) and depositors want more of their demand deposits than the bank has on hand d. excess reserves are greater than required reserves and banks have too much money in their vaults e. interest rates go so high banks are unable to make loans