Suppose that the interest rate paid to savers increases. As a result, Tom wishes to save less. This suggests that, for Tom,
A) the substitution effect is greater than the income effect.
B) the income effect is greater than the substitution effect.
C) utility maximization is not occurring.
D) future consumption is a luxury.
B
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The simple circular flow model shows that workers and capital-owners offer their services to firms through the
A. product markets. B. government agencies. C. employment agencies. D. resource markets.
If the Federal Reserve attempts to continue reducing unemployment by manipulating monetary policy, which of the following would you expect to see?
A) The rate of inflation will fall as the Fed tries to reduce the unemployment rate. B) The Fed's policies will be deflationary. C) The Fed's policies will be inflationary. D) The Fed will reduce the natural rate of unemployment.
During this century, the growth rate of real GDP in the United States has averaged approximately
What will be an ideal response?
The primary function of the International Monetary Fund is
A. to provide loans only to private firms in developing countries. B. to make direct, irrevocable transfers of funds from wealthy nations to poor nations. C. to make loans aimed at promoting global stability and hence growth. D. to lend solely on the basis of a nation's relative poverty.