If the interest rate increases from 3 percent to 4 percent, other things constant, individuals will want to
a. save and borrow more
b. save and borrow less
c. save more and borrow less
d. save less and borrow more
e. borrow more but save the same amount
C
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The marginal units of action choice X:
A. are the last ?X units and tend to generate the greatest amount of marginal benefits. B. are the last ?X units and tend to generate the smallest amount of marginal costs. C. are the initial ?X units, where ?X represents the change in the units of X. D. are the last ?X units, where ?X is the smallest amount you can add or subtract.
An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are:
A. Complementary goods B. Substitute goods C. Inferior goods D. Normal goods
Money
A. is anything the government declares to have value. B. facilitates specialization in production. C. is anything that is regularly used and generally accepted in economic transactions or exchanges. D. is necessary to conduct economic transactions.
Which of the following theories of business cycles implies that efficient markets, characterized by perfect information and by rational business firms and households, will still be characterized by business cycles?
A) Lucas's rational expectation model B) the natural rate hypothesis C) the real business cycle model D) classical theory