Assume a closed economy. If consumption spending is $6.2 trillion, investment spending is $2.5 trillion, net taxes are $1.5 trillion and total income is $11 trillion, how much must government purchases be?
a. $2.3 trillion
b. $0.8 trillion
c. $3.3 trillion
d. $7 trillion
e. cannot be determined without more information
A
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If the rate of return on the stock market is rm and the rate of return on a risk-free asset is rf, then
A) rm - rf measures the risk, all of it nondiversifiable, one has to accept in the stock market. B) rm - rf measures the risk, all of it diversifiable, one has to accept in the stock market. C) rm + rf measures the risk, all of it nondiversifiable, one has to accept in the stock market. D) rm + rf measures the risk, all of it diversifiable, one has to accept in the stock market. E) rm rf measures the stock market's total risk.
When determining equilibrium using supply and demand, the concept of ceteris paribus is used. The term ceteris paribus means
a. other things being equal. b. allowing things to change. c. other things being different. d. time and space considered.
When a lender underestimates the rate of inflation,
a. purchasing power is redistributed to the lender. b. purchasing power is redistributed to the borrower. c. the real rate of interest will be higher than expected. d. the nominal interest rate was set too low.
Rising healthcare costs are attributable to
A. reliance on expensive technology to support and prolong life. B. people living longer and desiring more care. C. third-party financing of healthcare costs. D. all of these.