Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase?
A) an increase in consumer income
B) a drought that sharply reduces barley output
C) a decrease in consumer income
D) unusually good weather that results in a bumper crop of barley
Answer: C
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Which of the following is an example of spending on goods and services in the circular flow model?
A) Belinda purchases a new computer for her tax-preparation business. B) Timmy purchases a new examination table for use in his veterinary clinic. C) Celeste buys fresh herbs at the farmers' market to use in her restaurant. D) Javier buys 800 square feet of wood flooring for his vacation home.
Why isn't the current yield a good indicator of holding a bond?
A) It doesn't account for the yield to maturity. B) It doesn't account for capital gains or losses. C) It doesn't account for the coupon. D) It assumes that the current price equals its par value.
The Keynesian analysis of fiscal policy implies that
a. fiscal policy should generally be expansionary except during periods of economic recession. b. fiscal policy should generally be restrictive except during inflationary booms. c. the federal budget should be balanced annually except during war. d. the federal budget should be used to maintain aggregate demand at a level consistent with full employment.
Suppose the marginal propensity to consume in an economy is 0.9. What would be the Keynesian multiplier in this economy?
Select one: a. 0.1 b. 2 c. 5 d. 10