The law of demand states that consumers buy more of a good when its price declines:
A. even if other demand determinants change at the same time.
B. only if their income increases at the same time.
C. provided all else remains constant.
D. because their income increases at the same time.
Answer: C
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When a foreign investor buys a bond issued in the United States
A) the balance on the capital account increases. B) the balance on the current account increases. C) the balance of trade increases. D) the balance on the financial account increases.
If the federal government runs a budget _______, then the national debt becomes __________
a. surplus, larger b. deficit, smaller c. surplus, smaller d. none of the above
According to Adam Smith's invisible hand principle, productive actions that promote the general welfare of society will be undertaken when
a. political representatives are elected democratically. b. competitive markets direct the actions of self-interested individuals. c. the selfish instincts of individuals are controlled. d. workers are able to organize and develop strong unions.
You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $400 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?
A. reduce the budget deficit by $400 billion B. reduce taxes by $100 billion and increase government purchases by $50 billion C. increase government purchases by $100 billion D. reduce taxes by $100 billion