The marginal propensity to consume (MPC) is typically
a. less than zero or greater than 1.0
b. equal to zero
c. equal to 1.0
d. between -1.0 and 1.0
e. between zero and 1.0
E
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An adverse oil-price shock reduces labor demand. What happens to current employment and the real wage rate?
A) Both employment and the real wage rate would increase. B) Both employment and the real wage rate would decrease. C) Employment would increase and the real wage would decrease. D) Employment would decrease and the real wage would increase.
The crowding out effect of expansionary fiscal policy when the money supply is not increased is confirmed by
A) the Keynesian econometric models only. B) the Monetarist models only. C) both the monetarist and Keynesian econometric models. D) neither the Monetarist nor the Keynesian econometric models.
For a given level of inflation, if bright prospects for the future of the economy cause businesses to increase their investment in new capital, then the ________ shifts ________.
A. short-run aggregate supply line; downward B. aggregate demand curve; right C. aggregate demand curve; left D. short-run aggregate supply line; upward
Which of the following is a normative economic statement?
A. The Federal budget deficit rose by 120 billion dollars B. The unemployment rate is expected to fall next month C. A trade surplus of 200 billion dollars should be our policy goal D. The federal funds rate was reduced by half a percentage point