When the decrease in the price of one good causes the demand for another good to decrease, the goods are
A. substitutes.
B. complements.
C. normal.
D. inferior.
Answer: A
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Suppose there are two small island countries: Avarice, which is populated by people who are completely self-interested, and Altruism, which is populated by people who have adopted social norms of generosity and cooperation. Commitment problems will be:
A. largely avoided on both islands. B. largely avoided in Altruism, but prevalent in Avarice. C. largely avoided in Avarice, but prevalent in Altruism. D. prevalent on both islands.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Under the Global Legal Settlement of 2002, the provision that requires investment banking firms to make their analysts' recommendations public is an example of
A) regulate for transparency. B) supervisory oversight. C) separation of functions. D) socialization of information production.
A fiscal policy designed for maximum stimulus of economic growth must discourage current ________ and thus makes for, at least in the short run, a ________ even income distribution
A) consumption, less B) consumption, more C) private saving, less D) private saving, more