What is a recession?
(A) A very mild and short expansion.
(B) A period when the economy is neither expanding nor contracting.
(C) A period when real GDP falls for at least six months.
(D) A long and severe depression.
Ans: (C) A period when real GDP falls for at least six months.
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The expected benefit of investment equals:
A. the real interest rate. B. private saving. C. the price of the capital good. D. the value of the marginal product of capital.
Expansionary monetary policy involves an increase in the money supply and a fall in interest rates, leading to a positive expansion in income
Indicate whether the statement is true or false
Under a gold standard, if the market price of gold is below the official price of gold (set by the monetary authority) members of the public would likely buy gold _______________ and sell it __________________, causing the market price of gold to ____________________
A) from the monetary authority; in the gold market; fall B) from the monetary authority; in the gold market; rise C) in the gold market; to the monetary authority; fall D) in the gold market; to the monetary authority; rise
If a consumer reallocates his or her spending away from Good A and towards Good B, then the consumer's total utility will increase if:
A. MUA/PA < 0 and MUB/PB < 0. B. MUA/PA < MUB/PB. C. MUA/PA > MUB/PB. D. MUA/PA > 0 and MUB/PB > 0.