What will cause an increase in US AD?
a. tax cut
b. an appreciating US dollar
c. a decline in G spending
d. all
Ans: a. tax cut
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Answer the following statement(s) true (T) or false (F)
1. People have rational expectations when their predictions are correct more often than not. 2. Even when econometric equations predict very well, they can be entirely useless as guides to policy. 3. The standard deviation of a portfolio is exactly equal to the average standard deviations of the individual stocks. 4. A risk-averse individual always prefers the basket with the highest standard deviation when choosing among baskets with the same expected value. 5. Uninsurable risks is one reason why fair-odds insurance is not always available.
The nation has its own MPC. When disposable income increases from $300 billion to $400 billion, national consumption increases from $300 billion to $360 billion. At Y = $400 billion, the MPC is:
a. 0.2. b. 0.5. c. 0.6. d. 0.67. e. 1.33.
The decision that the European Union should have a common currency was made at:
a. Maastricht b. Rome c. Vienna d. London
The "self-interest theory" considers an act to be rational if
A. it is an efficient pursuit of whatever aims one has at the moment of deliberation and action. B. it efficiently promotes the ongoing material interest of the person who performs it without the requirement that social justice be achieved. C. it conforms to generally accepted views of justice and also serves one's interests. D. the act was done while the person was sane and coherent.