On a graph of the consumption function, where the consumption function is below the 45 degree line, there is
A) zero disposable income.
B) saving.
C) maximum disposable income.
D) no induced consumption.
E) dissaving.
B
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Human wealth is a function (i.e., affected by changes in) of which of the following variables?
A) future expected income B) future expected taxes C) current interest rates D) all of the above E) none of the above
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $6.00; AVC = $4.00; MC = $3.50; MR = $3.50. The firm should
A. increase output. B. remain at the same position. C. increase price. D. shut down.
An intended goal of contractionary fiscal and monetary policy is
A) an increase in interest rates. B) an increase in the price level. C) a decrease in the unemployment rate. D) a decrease in the level of aggregate output.
College graduates earn much more than grade school dropouts mainly because
A. the college graduate is older. B. the college graduate has learned more. C. the college graduate is probably smarter, richer, more motivated, has better connections, and comes from a more supportive learning environment. D. the college graduate is more likely to have grown up in a large city, and to be more cosmopolitan.