Specialization means that a country devotes its energy and resources to only a small proportion of the world’s productive activities.
Answer the following statement true (T) or false (F)
True
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The marginal propensity to consume (MPC) is computed as the change in:
a. consumption divided by the change in savings. b. consumption divided by the change in disposable personal income. c. consumption divided by the change in GDP. d. None of these.
How would an economist respond to the following statement: "Wanting more goods makes us greedy."
Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $18 and market output of 400 units. How does this outcome compare to the efficient, ideal equilibrium?
a. The efficient price would higher than $18 while the efficient output would be less than 400 units. b. The efficient price would be higher than $18 while the efficient output would be greater than 400 units. c. The efficient price would be lower than $18 while the efficient output would be less than 400 units. d. The efficient price would be lower than $18 while the efficient output would be greater than 400 units.
Assume that the central bank purchases government securities in the open market. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and nominal value of the domestic currency rises. b. The real risk-free interest rate falls, and nominal value of the domestic currency falls. c. The real risk-free interest rate rises, and nominal value of the domestic currency remains the same. d. The real risk-free interest rate rises, and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.