The fallacy of composition is the fallacious view that
a. economic activity will benefit everyone.
b. what is true for the individual will also be true for the group.
c. it is possible for the whole to be greater than the sum of the individual parts.
d. association does not necessarily indicate causation.
B
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The overall money supply would tend to increase if the Fed were to
A) increase the required reserve ratio. B) increase the discount rate. C) buy government bonds. D) exchange crisp dollar bills for worn and tattered dollar bills.
If the economy were at its potential output level, which of the following is not true?
a. The actual unemployment rate would equal the natural rate. b. There would be some cyclical unemployment. c. There would be some frictional unemployment. d. There would be some structural unemployment.
If disposable income = $200 billion and the APC = 0.8, then saving
A. is $280 billion. B. is $160 billion. C. is $40 billion. D. cannot be determined.
Money illusion is
A. when people think they are better off when their income increases even though prices have increased by the same amount. B. could not exist if the economy did not have competitive markets. C. when people are motivated by self-interest. D. a basic condition that all classical economists assume people have.