Which of the following is the primary source of high earnings in a market economy?
A) a willingness to work hard even if you are not productive
B) a willingness to exploit workers and consumers
C) the ability to provide others with things that they value highly
D) a willingness to engage in actions where you gain at the expense of others
C) the ability to provide others with things that they value highly
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
When a price ceiling is set below the equilibrium price,
a. the quantity demanded will exceed quantity supplied. b. the quantity supplied will exceed the quantity demanded. c. the quantity supplied will equal the quantity demanded. d. the equilibrium price will fall.
How will an increase in the price of coffee affect the market for cocoa, a substitute good?
a. The supply of cocoa will increase, leading to a reduction in the price of cocoa. b. The supply of cocoa will decrease, leading to an increase in the price of cocoa. c. The demand for cocoa will increase, leading to an increase in the price of cocoa. d. The demand for cocoa will decrease, leading to a reduction in the price of cocoa.
Which of the following statements about government debt is false?
A. Government has the power to tax to finance its debt. B. Almost half of U.S. government debt is internal to the government. C. Government can create money to finance its debt. D. Most U.S. government debt is owned by foreigners.