"Which came first, the chicken or the egg?" This question seeks to address the common fallacy of __________ in the context of correlation and causation.
A. reverse causality
B. omitted variables
C. linear relationships
D. comparative analysis
A. reverse causality
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XYZ Gadget Company is currently considering which investment projects it should undertake. The following list of projects along with the estimated rate of return of each project is presented to the executive management team:Project A (9%)Project B (7.5%)Project C (6%)Project D (11%)Project E (5.5%)The current interest rate in the loanable funds market is 7%. However, the government is considering an increase in government borrowing to implement fiscal policy. How high would interest rates need to go to induce the company to drop all but one of its planned investment projects?
A. Above 9% B. Above 7% C. Above 7.5% D. Above 11%
If a regulatory commission wishes to allow a firm to earn a normal rate of return, it should set price equal to: a. marginal revenue
b. marginal cost. c. average total cost. d. average variable cost.
Economists who believe that market concentration is not harmful to a country's economic well being
a. favor laissez-faire government policies b. think that markets should be regulated c. think that the government should own those monopolies d. like the idea of price controls e. are nonexistent
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and real GDP falls. b. The quantity of real loanable funds per time period falls and real GDP rises. c. The quantity of real loanable funds per time period rises and real GDP remains the same. d. The quantity of real loanable funds per time period and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.