Macroeconomics is best described as the study of
A. the nation's economy as a whole.
B. the relationship between inflation and wage inequality.
C. very large issues.
D. the choices made by individual households, firms, and governments.
Answer: A
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Richard receives government transfer payments and currently consumes five guns and six goose livers. Assume the price of guns decreases by 10% and the price of goose liver increases by 20%
The government raises Richard's transfer payments so he can still afford five guns and six goose livers. Does this constitute a true cost-of-living adjustment? A) No. Richard is overcompensated. B) No. Richard is undercompensated. C) Yes. The payment just achieves the right level of compensation. D) Not enough information.
The optimal inventory to hold maximizes the profit of the inventory, which is the profit from the units sold ________ the ________ from the units that remain unsold.
A) plus; profit B) plus; loss C) minus; profit D) minus; loss
In Keynes's view, an excess quantity of money demanded causes people to:
A. sell bonds and the interest rate rises. B. buy bonds and the interest rate falls. C. buy bonds and the interest rate rises. D. increase speculative balances.
The key disadvantage of the kinked-demand model is that it:
A) explains why firms may collude, but it does not explain how they interact. B) does not explain why prices may be rigid in an oligopoly. C) requires the assumptions of perfect competition. D) only holds under price leadership.