In economics, scarcity means that
a. there are not enough resources for everything that people want.
b. we can never feed every person in the country.
c. the price of goods has increased more rapidly than the general price level.
d. there is not enough of a particular good for everyone to buy all they want at the prevailing price.
a. there are not enough resources for everything that people want.
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Suppose that real GDP grows by 3 percent a year, the quantity of money grows 6 percent a year, and velocity grows by 1 percent. In the long run, the inflation rate equals
A) 12 percent. B) 9 percent. C) 10 percent. D) 4 percent. E) 5 percent.
An increase in personal saving as a percentage of disposable income contributes to capital deepening
Indicate whether the statement is true or false
Which of the following correctly describes the difference between commodity money and fiat money?
A. Fiat money has value based on the material from which it is made, while commodity money is accepted by law and not because of its tangible value. B. Commodity money is either made out of a valuable commodity like silver or gold, or is redeemable for a valuable commodity. Fiat money is not. C. Commodity money can only be used to buy commodities such as grains or lumber, while fiat money can be used to buy anything. D. Fiat money is used during times of emergency, such as hurricanes or war, when the existing stock of commodity money is inadequate to purchase needed goods and services.
Automatic stabilizers decrease the impact of a recession on the level of economic activity because they
A) reduce the interest rate and so allow firms to increase their level of investment. B) mean disposable income does not change by as much as real GDP. C) increase taxes so the budget is always balanced. D) raise the exchange rate so U.S. exports become more attractive to foreigners. E) increase the quantity of money in circulation.