When the price of a normal good falls, the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased
A) an increase; an increase
B) an increase; a decrease
C) a decrease; an increase
D) a decrease; a decrease
A
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If your wealth is held as currency or in checking accounts, or other assets that you can convert to money on short notice, your assets are considered to be
A) abundant. B) interest bearing. C) liquid. D) fast moving.
A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is: a. zero
b. the prime rate. c. the discount rate. d. the federal funds rate. e. the required reserve ratio.
Which of the following is an example of a negative externality?
A. A Japanese company begins to produce cars and earns large profits. B. An employee of a chemical company spills acid on his arm, causing severe damage. C. John plants fruit trees in his front yard, which attracts bees, which sting neighbor Mary. D. Sally buys coffee at McDonald's, spills some on her, and burns her arm.
If the growth rate for GDP was 5 percent and GDP in year 1 was 140, then GDP in year 2 would be:
A. 133.3. B. 135. C. 145. D. 147.