An adverse supply shock shifts the short-run Phillips curve to the left
a. True
b. False
Indicate whether the statement is true or false
False
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Most economists accept the need for a required pension system because
A. economists believe that saving is good for the soul. B. people will save less than is optimal knowing that they can rely on welfare, and people may not have the information necessary to calculate their correct level of savings. C. people will save less than is optimal knowing that they can rely on welfare. D. people may not have the information necessary to calculate their correct level of savings.
An economy produces only 1,000,000 computers valued at $2,000 each. Of these, 200,000 are sold to consumers, 300,000 are sold to businesses, 300,000 are sold to the government, and 100,000 are sold abroad. No computers are imported. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of the investment component of GDP?
A. $0.8 billion B. $0.3 billion C. $0.4 billion D. $0.6 billion
Assume there are no investment projects that will produce an expected rate of return of 8% or more. There are, however, $2 billion worth of investment projects with an expected rate of return at 7%. There is an additional $2 billion for every drop of the interest rate by 1%. If the real interest rate is 3% in this economy, the cumulative amount of investment at the 3% or higher rate of return is
A. $10 billion. B. $4 billion. C. $6 billion. D. $8 billion.
Maryanne expects to work for another 30 years and expects to live another 10 years after she retires. If Maryanne completely smooths consumption over her lifetime, her marginal propensity to consume out of wealth is
A) 0.025. B) 0.033. C) 0.075. D) 0.10.