If the MPS is 0.5, the tax multiplier is
A. -5.
B. -2.
C. -1.
D. -0.5.
Answer: C
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The cross elasticity between two goods, X and Y, is positive. From this, we can conclude that goods X and Y are:
a. substitute goods. b. complementary goods. c. unrelated goods. d. inferior goods. e. normal goods.
Coordination failures occur when
A. one party withholds valuable information in a transaction that leads to overproduction. B. party A would like to change his behavior if party B would change hers, and vice versa, and yet the two changes do not take place because the decisions of A and B are made independently. C. consumers save more of their income than the government would like. D. the average price of a good persists, even though the good should be priced higher than the average price.
Refer to the graph shown. The shift in the graph from D1 to D2 shows how an expansionary U.S. fiscal policy can cause an increase in:
A. interest rates that reduce the dollar's value. B. prices that raise the dollar's value. C. prices that reduce the dollar's value. D. interest rates that raise the dollar's value.
People hold money as an asset rather than other assets because
A. it holds its value. B. it grows in value. C. there is no cost to holding money as an asset. D. it is highly liquid.