According to liquidity preference theory, as real income increases, so does ________
A) the supply of real money balances
B) the demand for real money balances
C) the real interest rate
D) all of the above
E) none of the above
B
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To ensure all students are protected from getting the flu this year, your school offers free flu shots. What type of externality exists in this example?
A) negative consumption externality B) positive consumption externality C) positive production externality D) negative production externality E) neutral externality
Suppose there are ten people playing cards in a room. One of them wants to smoke a cigar, nine of them dislike the smell of cigar smoke. The smoker values the privilege of smoking at $5, and each of the other nine people of the room would be willing to pay fifty cents for clean air in the room. The rules governing use of the room state that smoking is not allowed unless everyone agrees to allow smoking. If the cigar smoker paid each other occupant fifty cents for the right to smoke, the cigar smoker would be ________ and the other occupants would be ________.
A. better off; better off B. better off; just as well off as before the payment C. better off; worse off D. worse off; just as well off as before the payment
At very low levels of disposable income,
A. consumption is greater than disposable income. B. disposable income is greater than consumption. C. people save most of their incomes. D. consumption is negative.
The economic impact of ________ during recessionary periods is to decrease taxes.
A. negative demand shocks B. automatic stabilizers C. increasing the reserve rate D. recognition lags