Empirical evidence shows that in response to the 2008 and 2009 tax rebates, consumers spent 50% to 90% of the amounts they received. This suggests that
A. Okun's law holds.
B. budget constraints are not binding.
C. Ricardian equivalence does not hold.
D. people do not understand economics.
Answer: C
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A tradeoff is
A) represented by a point inside a PPF. B) represented by a point outside a PPF. C) a constraint that requires giving up one thing to get another. D) a transaction at a price either above or below the equilibrium price.
If real income rises faster than absorption during a time of economic expansion, then
A) the nation will experience a current account surplus. B) the nation will experience a current account deficit. C) national production will increase until absorption and income are balanced. D) the nation's imports must rise relative to its exports.
The intersection of supply and demand in the capital market determines the market equilibrium price and quantity in the:
A. purchase market. B. both the rental and purchase markets. C. rental market. D. Any of these statements could be true.
Economic growth can best be portrayed as a:
A. leftward shift of the production possibilities curve. B. movement from a point near the vertical axis to a point near the horizontal axis on the production possibilities curve. C. movement from a point inside to a point outside of the production possibilities curve. D. rightward shift of the production possibilities curve.