If a consumer's budget line between meat and potatoes has a vertical axis intercept at 100 pounds of meat and a horizontal axis intercept at 100 pounds of potatoes
a. demand must be inelastic
b. the consumer's budget must equal $100
c. both meat and potatoes must be priced at $1 per pound
d. the price of a pound of meat must equal the price of a pound of potatoes
e. the opportunity cost of meat in terms of potatoes cannot be determined
D
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Say's Law
a. is valid only in a simple economy without financial markets b. led economists during the 1920s to encourage the government to adopt flawed economic policies that led to the Great Depression c. assures us that in the aggregate, firms are able to sell their output so that full employment can be sustained d. tells us that in the long run, markets clear e. tell us that firms must carefully monitor consumer spending and saving in order not to produce more than consumers are willing to purchase
A contractionary fiscal policy negates some of the leftward shift of the aggregate demand curve because the resulting fall in interest rates
A) increases the quantity of investment, raises the exchange rate and boosts net exports. B) discourages savings, decreases the quantity of investment, raises the exchange rate, and reduces net exports. C) increases the quantity of investment, lowers the exchange rate, and boosts net exports. D) discourages savings, increases consumption, and reduces the quantity of investment and imports.
How well did the Federal Reserve Banks perform during the Great Depression?
(A) The Chair of the Board of Governors made bad decisions and directed the Federal Reserve Banks to act in harmful ways. (B) The Federal Reserve System skillfully guided the United States economy out of the Great Depression. (C) Individual governors of the Federal Reserve Banks disagreed over policy and were unable to stop the depression. (D) The Great Depression took place before the Federal Reserve System was established.
Which of the following assets is most liquid?
A. funds in a checking account B. a car C. a home D. a municipal bond