A higher real rate of interest ________ the reward for saving and ________ the amount people need to save to reach a given target.
A. decreases; decreases
B. increases; increases
C. increases; decreases
D. decreases; increases
Answer: C
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If a country produces good Y (measured on the vertical axis) and good X (measured on the horizontal axis), then the absolute value of the slope of its production possibility frontier is equal to
A) the opportunity cost of good X. B) the price of good X divided by the price of good Y. C) the price of good Y divided by the price of good X. D) the opportunity cost of good Y. E) the cost of capital (assuming that good Y is capital intensive) divided by the cost of labor.
When future labor income falls in a small open economy, it causes the current account to ________ and investment to ________
A) fall; rise B) rise; remain unchanged C) fall; remain unchanged D) rise; rise
Which of the following explains why elected representatives will find borrowing to be an attractive method of financing current government programs?
What will be an ideal response?
When firms in a purely competitive industry are earning profits that are greater than normal, the supply of the product will tend to decrease in the long run.
Answer the following statement true (T) or false (F)