When sketched as a function of national income, the investment curve is
a. horizontal
b. vertical
c. upward sloping
d. downward sloping
e. parabolic
A
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What are the proximate causes of prosperity? How are they related to the fundamental causes of prosperity?
What will be an ideal response?
The term Ceteris paribus means that:
a. everything is changing. b. all other things remain unchanged. c. no one knows which variables will change and which will remain constant. d. the basic principle of economics do not apply to the case being considered.
The reason the short-run macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
a. the short-run macro model is flawed and inaccurate b. the classical model is flawed and inaccurate c. the two models measure completely different aspects of the economy d. in the short run, spending affects output, but not in the long run e. in the short run the role of government in helping the economy return to equilibrium is not considered
Market and socialist economies can be contrasted in all the following ways except that:
A. under a market economy government plays no role in the market; under socialism, government planning boards make most major economic decisions. B. under a market economy labor is allocated by individual choice based on wage levels; under traditional socialism it is allocated by a government planning board. C. under a market economy self-interest is the primary motive of economic activity; under socialism, individuals are supposed to act from considerations of the general good. D. under a market economy the distribution of income is to each according to his ability, effort, and inheritance; under ideal socialism the distribution of income is to each according to his need.