When an economy is producing its potential output, which of the following is true?
What will be an ideal response?
The economy is producing its maximum sustainable output.
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An increase in the money supply will cause the nominal interest rate to ________ and the quantity of money to ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Identify the “oversimplified multiplier formula.”
A. Multiplier = 1 divided by (1 ? change in GDP) B. Multiplier = 1 divided by (1 ? marginal propensity to consume) C. Multiplier = 1 divided by (1 ? marginal propensity to save) D. Multiplier = 1 divided by (1 ? rate of inflation)
Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.
Answer the following statement true (T) or false (F)
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is
A. -2/3. B. -1.5. C. -3. D. -30.