To answer the "HOW" to produce question, society should:
A. Use all the available labor.
B. Maximize the quantity of all resources used.
C. Find an optimal method of producing goods and services.
D. Attempt to produce a combination of goods and services beyond the production possibilities.
Answer: C. Find an optimal method of producing goods and services.
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According to the classical model shown above, an autonomous decline in investment shifts the investment schedule to the left. Furthermore, the equilibrium interest rate declines. Distance A describes an interest rate induced
a. decline in saving, which is an equal increase in consumption. b. increase in investment. c. decrease in investment. d. decline in saving, which exceeds the increase in consumption.
The Federal Reserve may increase the money supply by: a. selling a bond to a member bank
b. selling a bond to a securities dealer. c. lending reserves to banks. d. increasing required reserve ratios. e. increasing the discount rate.
The saving rate equals saving divided by:
A. income. B. assets. C. wealth. D. liabilities.
What must occur for a good to violate the Law of Demand?
A. The good must be normal and the income effect must be larger than the substitution effect. B. The good must be normal and the substitution effect must be larger than the income effect. C. The good must be inferior and the income effect must be larger than the substitution effect. D. The good must be inferior and the substitution effect must be larger than the income effect.