If a positive relationship exists between x and y:
A. an increase in x will cause y to decrease.
B. a decrease in x will cause y to increase.
C. the relationship will graph as an upsloping line.
D. the vertical intercept must be positive.
Answer: C
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The average price of a share of stock on the New York Stock Exchange falls by 30 percent. Other things being equal, we would expect
A) a shift up of the consumption function. B) an increase in the marginal propensity to consume. C) a decrease in the marginal propensity to consume. D) a shift down of the consumption function.
When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing
i. seasonal unemployment. ii. structural unemployment. iii. cyclical unemployment. A) i and iii B) ii and iii C) ii only D) i and ii E) i only
The rate of unemployment that occurs when the economy is producing its potential GDP _____
a. is called the natural rate of unemployment b. is zero c. is thought to be approximately 10% d. can be kept at zero through fiscal policy e. is equal to the rate of stagflation in most years
Which of the following statements describes a surplus?
a. A surplus is the same as an excess demand. b. A surplus occurs when the price is above equilibrium price. c. A surplus occurs when the price is below equilibrium price. d. A surplus occurs when the quantity demanded exceeds the quantity supplied.