Which of the following statements is true?
A. An increase in inventories can reduce gross investment.
B. Government intervention to help recover from a recession can increase the government deficit.
C. The aggregate expenditures model shows the relationship between unemployment and income.
D. A decrease in imports reduces aggregate expenditures in the economy.
Answer: B
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A nation's net exports consist of:
A. its exports plus its imports. B. its exports minus its imports. C. its exports plus all other nation's imports. D. its imports plus all other nation's exports.
Two consequences of asymmetric information are adverse selection and moral hazard. An important distinction between the two is
A) adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed. B) moral hazard exists prior to the completion of a transaction while adverse selection occurs after the transaction is completed. C) moral hazard leads to an inefficient quantity while adverse selection leads to an efficient quantity. D) adverse selection leads to an inefficient quantity while moral hazard leads to an efficient quantity.
Suppose that as a result of a stock market boom, consumers become less concerned about saving for retirement and increase their current consumption expenditures. Which of the following would you expect to occur as a result of this change?
a. In the short run, unemployment will increase and inflation will fall. b. In the short run, unemployment will increase and inflation will rise. c. In the short run, unemployment will decrease and inflation will rise. d. In the short run, unemployment will decrease and inflation will fall.
Use the following graph of the demand for noodles to answer the question below.
Refer to the three demand curves for noodles and assume noodles are an inferior good. Which of the following would shift the demand for noodles from D1 to D2?
A. an increase in consumer incomes B. a decrease in consumer incomes C. a decrease in the price of noodles D. an increase in the price of noodles