Consumer saving and business investment are the primary sources of imbalance in a wholly private and closed economy (that is, if there is no government and no foreign trade).
Answer the following statement true (T) or false (F)
True
In a wholly private and closed economy, there is no government or trade sector; if saving does not equal investment, there must be a recessionary or inflationary GDP gap.
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Which of the following is NOT an accurate description of the recession that accompanied the financial crisis of 2007-2009?
A) GDP declined by more than twice the rate of the average recession. B) Inflation rose at nearly twice the rate as the average recession. C) It lasted just under twice as long as the typical recession. D) Peak unemployment was about one-third higher than usual.
Suppose you hear of a great deal on a used car and wonder, "Why is the price so low?" This might be an instance of ________
A) tyranny of collateral B) adverse selection C) the free rider problem D) moral hazard
Which of the following is a direct tax?
A. Excise tax B. Tax on corporate profits C. Property tax D. Sales tax
In the context of terrorism, increasing airport security has the
A. negative externality of making other potential targets relatively more attractive to future terrorists. B. positive externality of making all aspects of life safer. C. positive externality of making other potential targets relatively more attractive to future terrorists. D. negative externality of making all aspects of life safer.