Which of the following represents the opportunity cost of holding money?
A) the interest rate
B) liquidity
C) the rate of inflation
D) none of the above
A
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The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles
Ronald's budget line becomes ________ and ________. A) flatter; shifts rightward B) flatter; does not shift C) steeper; shifts rightward D) steeper; shifts leftward
If the marginal propensity to save is 0.1, then a $10 million decrease in disposable income will
A) increase consumption by $9 million. B) decrease consumption by $1 million. C) increase consumption by $1 million. D) decrease consumption by $9 million.
The revenue collected by an income tax is a function of the average tax rate
a. True b. False
Economic growth is likely to be faster when
a. higher tax rates are imposed on high income individuals in order to provide greater cash payments to the poor. b. domestic markets are opened to foreign sellers and foreign investors. c. the supply of money is increased rapidly so individuals have more money to spend. d. dramatic changes in political and legal institutions occur often.