When economists use the term Ceteris paribus, they are indicating that:
A. the relationship between two economic variables cannot be determined.
B. the analysis is true for the individual but not for the economy as a whole.
C. all other variables except the ones specified are assumed to be constant.
D. their conclusions are based on normative economics rather than positive economic analysis.
Answer: C
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Which of the following terms refers to the time it takes for the funds relating to fiscal policy to be dispersed to the appropriate agencies to implement the programs?
a. recognition lag b. implementation lag c. legislative lag d. budgetary lag
Banks deposit funds at the central bank, because:
a. They need them there in order be able to purchase government securities. b. They can be counted as required reserves. c. Both of the above are true. d. Actually, banks do not deposit funds at the central bank. They deposit them at the Treasury.
All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?
a. Productivity will definitely fall. b. Productivity will definitely be unchanged. c. Productivity will definitely rise. d. None of the above are necessarily correct.
An asset market is said to experience a speculative bubble when
a. the price of the asset rises above what appears to be its fundamental value. b. the price of the asset appears to follow a random walk. c. the market cannot establish an equilibrium price for the asset. d. the asset is a natural resource and its supply is manipulated by foreign nations and foreign firms.