Refer to Figure 18-5. The highest 20 percent of households
A) earn 24 percent of the society's total income. B) earn 28 percent of the society's total income.
C) earn 42 percent of the society's total income. D) earn 72 percent of the society's total income.
B
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Banks face the problem of ________ in loan markets because bad credit risks are the ones most likely to seek bank loans
A) adverse selection B) moral hazard C) moral suasion D) intentional fraud
If the consumer's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4 respectively, she would maximize her satisfaction by purchasing:
A. 3 units of J and 3 units of K.
B. 1 unit of J and 3 units of K.
C. 4 units of J and 1 unit of K.
D. 2 units of J and 3 units of K.
The aggregate demand curve shifts when there are changes in:
A. exogenous spending and the Fed's reaction function. B. potential output and exogenous spending. C. exogenous spending and inflation inertia. D. inflation inertia and aggregate supply shocks.