The World Bank primarily engages in
A. long-term lending aimed at helping developing nations' governments and businesses make investments that will contribute to economic growth.
B. short-term lending aimed at helping developing nations repay debt accumulated in past years.
C. short-term lending aimed at helping developing nations repay loans from the International Monetary Fund.
D. long-term lending aimed at helping developing nations' governments and central banks keep exchange rates from varying.
Answer: A
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In the above figure, the economy is initially at point B. If taxes increase, there is
A) a movement to point C. B) a movement to point A. C) a shift to AD2. D) a shift to AD1.
Consider a perfectly competitive market in which the firms are earning above-normal profit in the short run. In the long run, forces will come into play to
a. decrease market supply b. shift the horizontal demand curve facing each firm downward c. increase the market price d. encourage existing firms to increase output e. decrease the number of sellers in the market
Assume that an increase in a household's disposable income from $40,000 to $48,000 leads to an increase in consumption from $35,000 to $41,000. This means that the household's
A. marginal propensity to save is 0.20. B. marginal propensity to consume is 0.6. C. average propensity to consume is 0.75. D. marginal propensity to consume is 0.75.
What will happen in an economy if the actual GDP is too high relative to the potential GDP?
What will be an ideal response?