Which of the following economic models is untestable?
a. Demand and supply model of a product market.
b. Monopoly model of market power.
c. Edgeworth box model of exchange.
d. Capital asset pricing model.
c. Edgeworth box model of exchange.
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The opportunity cost of the financial resources used to finance the purchase of capital is
A) the price of the capital goods purchased. B) the real interest rate. C) the quantity of investment demanded. D) the supply of investment. E) capital investment.
If the MPC is 0.80, and if the goal is to increase real GDP by $200 million, then by how much would government spending have to change to generate this increase in real GDP?
a. $240 million. b. $200 million. c. $180 million. d. $40 million.
Do policy makers know the level of unemployment that is associated with “full employment”?
A. Yes, economists have the precise level of unemployment that is full employment. B. Yes, although there is a small range of uncertainty in this measure. C. No, economists have no idea what this level of unemployment is. D. No, this number is not known with complete accuracy.
Mark holds $100 in cash in his wallet to make purchases for gas and groceries. This represents the
A. Speculative demand for money. B. Transactions demand for money. C. Precautionary demand for money. D. Market demand for money.