In a simple economy without government or foreign trade, any income not consumed is called
A) net investment. B) depreciation. C) saving. D) investment.
C
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Inflation reduces the multiplier effect by reducing consumers’ wealth and purchasing power.
Answer the following statement true (T) or false (F)
Protection of an infant industry should be withdrawn once that industry:
a. charges the same price as foreign competitors. b. goes public on the stock exchange. c. raises a large amount of sales revenue. d. achieves sufficient size to compete with foreign firms. e. earns enough profit as a result of the subsidies to remain in business.
In a perfectly competitive market with 1,000 firms, each demanding 50 laborers at a wage rate of $5 per hour, the quantity demanded of labor by the industry producing for this market at this wage is
a. 25,000 workers b. 50,000 workers c. 250,000 workers d. 5,000 workers e. insufficient information to determine the quantity