Deficient information on unsafe products can cause:
a. overconsumption of a product.
b. waste of resources used to produce a product.
c. consumers to pay a higher price for a product.
d. all of the above answers are true.
e. none of the above answers a. - c. are true.
d
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If the natural unemployment rate is 5 percent and the actual unemployment is 3 percent, then Okun's Law concludes that real GDP is
A) 2 percent greater than potential GDP. B) 4 percent less than potential GDP. C) 3 percent greater than potential GDP. D) 4 percent greater than potential GDP. E) 2 percent less than potential GDP.
Suppose that medical researchers discover a new drug which slows the aging process allowing the average life span in the United States to increase to 95 years of age. The lifecycle hypothesis suggests that
A) consumption spending would increase since lifetime income increases. B) consumption spending would increase since estimates of permanent income would increase. C) consumption spending would decrease since savings would rise to provide income for the longer retirement periods. D) None of the above is correct since predicted future annual incomes may not change.
Advocates of an active policy associate a low cost with the passive approach so, they favor an active stabilization policy to stimulate aggregate demand
Indicate whether the statement is true or false
When the Fed buys U.S. government securities, the money supply
A) increases because there is an increase in transaction deposits at the bank of the bond dealer but there is no decrease in transaction deposits at any other bank.
B) decreases because there is an increase in the reserves of the bond dealer's bank.
C) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a reduction in transaction deposits at the Fed.
D) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a fall in transaction deposits at another bank.