Changes in taxes and transfers affect planned spending:
A. indirectly, by changing disposable income and, consequently, consumption.
B. directly, by changing induced expenditures.
C. autonomously.
D. only when there is an expansionary gap.
Answer: A
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Unlimited liability is NOT a characteristic of
A) corporations. B) partnerships. C) proprietorships. D) the market economy today.
If the price elasticity of demand for chicken is 2, then a 20% decrease in the price of chicken will lead to a:
A. 10% decrease in the quantity demanded of chicken. B. 40% decrease in the quantity demanded of chicken. C. 40% increase in the quantity demanded of chicken. D. 10% increase in the quantity demanded of chicken.
Matt deposits $150,000 into his bank, which has a required reserve ratio of 15 percent. Matt’s bank must keep ______ of this new deposit in its reserves.
a. $10,000 b. $127,500 c. $150,000 d. $22,500
(Consider This) The ratchet effect is the tendency
A. the price level to increase but not to decrease. B. nominal GDP to increase more rapidly than real GDP. C. real interest rates to fall more rapidly than nominal interest rates. D. consumption to rise year after year regardless of what happens to disposable income.