The intertemporal substitution hypothesis suggests that hours of work should
A. be greatest during peak wage years.
B. steadily decrease with age.
C. increase immediately prior to retirement.
D. steadily increase with age.
E. be greater for women than for men.
Answer: A
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A good is rivalrous in consumption if
A. its consumption by one person reduces its consumption by others. B. it can be used to satisfy many needs (as compared to just one need). C. it can be used to satisfy many wants (as compared to just one want). D. its consumption by one person increases its consumption by others. E. a and c
Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:
a. $15 billion. b. $20 billion. c. $50 billion. d. $80 billion.
The change in the money supply in an economy is measured as:
a. the difference between the government deficit and government borrowing. b. the sum of a change in high-powered money and the change in tax revenues. c. the difference between government borrowing and government spending. d. the ratio of the change in excess reserves to the deposit expansion multiplier. e. the change in the government budget deficit.
A perfectly inelastic demand:
A. has an absolute value greater than 1. B. is demonstrated by a perfectly horizontal demand curve. C. means people will quickly change the quantity they purchase when price changes. D. means people will not respond to any change in price.