Changes in government purchases affect spending:
A. autonomously.
B. indirectly.
C. directly.
D. only when there is an expansionary gap.
Answer: C
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Refer to Figure 8.6. The vertical distance AB is Outdoor Equipment's A) marginal cost. B) average fixed cost. C) total fixed cost. D) total cost.
Any test of rational expectations is a joint test of the underlying model that expectations are formed rationally.
Answer the following statement true (T) or false (F)
Social Security contributions are
A. a voluntary dollar amount that people contribute towards Social Security. B. mandatory taxes partially paid out of workers' wages and salaries. C. entirely paid by your employer. D. collected only from people earning more than $120,000 a year.
A value of the absolute price elasticity of demand equal to 0.25 indicates that
A) a 10% decrease in price leads to a 4% increase in quantity demanded. B) a 10% decrease in price leads to a 25% increase in quantity demanded. C) a 1% decrease in price leads to a 2.5% increase in quantity demanded. D) a 0.25% decrease in price leads to a 1% increase in quantity.