Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). In the Application, findings by Anil Kasyap showed that even though the catalogs listed in the Application were reissued every six months, the prices which were tracked in these retail catalogs:
A. were typically fixed for a year or more.
B. changed every month.
C. tended to fall during periods of high inflation.
D. were not listed due to low rates of inflation.
Answer: A
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Because inflation was not a serious problem during the Great Depression, Keynes's analysis assumed
A) that unemployment also was not a problem. B) that the money supply was fixed. C) that the price level was fixed. D) that monetary policy is not effective.
Since business firms will undertake a project whose rate of return exceeds the present level of interest rates, when interest rates
A) rise planned investment rises, ceteris paribus. B) fall planned investment falls, ceteris paribus. C) rise planned investment does not change. D) rise planned investment falls, ceteris paribus.
Diversification:
A. reduces the likelihood that bad things will happen. B. means you're not likely going to be completely ruined by a single unfortunate event. C. increases the likelihood that bad things will happen. D. None of these statements is true.
A budget surplus is
A. An excess of government spending over government revenues in a given time period. B. Used only in time of war. C. An excess of government revenues over government expenditures in a given time period. D. None of the choices are correct.