Answer the following statement(s) true (T) or false (F)
1. A price index is calculated by dividing the cost of a market basket in the base year
by the cost of the market basked in the current year.
2. The Consumer Price Index (CPI) and GDP deflator often show opposite trends.
3. Unemployment is usually relatively high at the peak of a business cycle.
4. Most business cycles last a similar length of time.
5. Lagging economic indicators follow economic activity.
1. FALSE
2. FALSE
3. FALSE
4. FALSE
5. TRUE
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A change in consumption spending caused by income changes is ________ change in spending, and a change in government spending that occurs to improve roads and bridges is ________ change in spending
A) an autonomous; an induced B) an induced; an autonomous C) a contractionary; an expansionary D) an expansionary; a contractionary
A monopolistic competitor behaving in a profit-maximizing way will
A) not advertise. B) advertise as much as it can in order to increase its sales. C) advertise to the point where the additional sales from advertising equal the additional marginal costs of the product. D) advertise to the point where the additional revenue from one more dollar of advertising just equals the extra dollar cost of advertising.
Division of labor means that
A) the labor market in the United States is geographically segmented. B) some employees join labor unions and others do not. C) management and labor are always in conflict. D) the production process is divided into smaller tasks.
Suppose a national government increased its deficit and had to borrow $25 billion. The net effect on the banking system would be to:
a. Reduce bank reserves by $25 billion and reduce bank deposits by $25 billion. b. Increase bank reserves by $25 billion and increase bank deposits by $25 billion. c. Decrease government checking accounts in the banking system by $25 billion and increase the public's checking accounts there by $25 billion. d. Increase government checking accounts in the banking system by $25 billion and increase the public's checking accounts there by $25 billion. e. Increase government checking accounts in the banking system by $25 billion and reduce the public's checking accounts there by $25 billion.