In a barter economy,
A) money is a medium of exchange.
B) coins are used to facilitate trade.
C) money is a store of value.
D) goods and services are traded directly for each other.
E) the money supply consists entirely of coins and currency.
D
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If the government allows business firms an investment credit to lower taxes, then
A) the user cost of capital declines and V* increases. B) the user cost of capital declines and V* decreases. C) the user cost of capital increases and V* decreases. D) the user cost of capital increases and V* increases.
An example of a commitment device for Jane, who says she really wants to save more would be:
A. an agreement that she give any new clothes, jewelry, or makeup purchases to her best friend, and Jane is not allowed to borrow them. B. a commitment to only buy things on sale. C. a decision to cook her own food and not order take-out or delivery food unless she is too busy. D. buying a piggy bank to store savings.
Suppose the government's goal is to increase consumption in the year 2002 . Its two options are (1) an announced one-time $1 billion dollar tax cut for 2002 or (2) an announced permanent tax cut (2000 and thereafter) of $1 billion dollars starting in 2002. Which would more effectively achieve the government's goal?
a. the one-time tax rebate, if Friedman's permanent income hypothesis is correct b. the permanent tax cut, if Friedman's permanent income hypothesis is correct c. either option would do because each will increase consumption by the same amount d. the one-time tax rebate, if Duesenberry's relative income hypothesis is correct e. the permanent tax cut, if Duesenberry's relative income hypothesis is correct
Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2 is:
A. $180 billion. B. $190 billion. C. $200 billion. D. $210 billion.