Normative economics is
A. analysis of the behavior of the economy as a whole.
B. analysis that is strictly limited to making either purely descriptive statements or scientific predictions.
C. decision making undertaken by households and business firms.
D. analysis involving value judgments about economic policies; or a statement of "what ought to be."
Answer: D
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The multiplier effect
A) explains what causes an expansion. B) has no impact on equilibrium expenditure. C) reinforces the negative effects of any reduction in spending. D) explains what causes a recession. E) explains how the economy recovers from a recession.
When bad storms slow the check-clearing process, float tends to ________ causing the Fed to initiate defensive open market ________
A) decrease; sales B) decrease; purchases C) increase; sales D) increase; purchases
For Meg, the substitution effect of an interest-rate increase is stronger than the income effect. In response to a higher interest rate, will Meg save more or will she save less?
Which of the following is not a prediction of the theory on baseball caps and cheating?
A) More people will wear baseball caps on test days than on lecture days. B) More people will wear baseball caps for multiple choice tests than for essay tests. C) More people will wear baseball caps when students sit close to each other in class and are taking a test than when students sit far apart from each other and are taking a test. D) Baseball caps are more likely to be worn on backwards (than frontwards) on test days than on lecture days. E) none of the above