If the market interest rate is 5 percent, the opportunity cost of $100 worth of present consumption
a. is $105 today
b. is $105 next year
c. is $5 today
d. is $5 next year
e. cannot be determined unless we know the consumer's rate of time preference
B
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An increase in investment spending will be multiplied into a larger increase in GDP illustrates the concept of
A. expansionary fiscal policy. B. the multiplier. C. an inflationary boom. D. international trade.
The crowding out of consumer spending by an increase in taxes will be the greatest when
A) consumers would have spent the entire amount they now must pay in taxes. B) consumers would have saved the entire amount they now must pay in taxes. C) consumers would have spent only a fraction of the amount they now must pay in taxes. D) the government has a history of increasing taxes on a regular basis.
The full-employment level of real GDP is the level which can be produced with: a. given technology and productive resources
b. frictional and structural unemployment equal to zero. c. cyclical unemployment equal to zero. d. both a and b. e. both a and c.
The law of demand refers to the: a. decrease in price that results as more units of a product are demanded
b. increase in price that results from an increase in demand for a good of limited supply. c. inverse relationship between the price of a good and the quantity demanded. d. increase in the quantity of a good made available when its price increases.