Which of the following is an example of an autonomous spending change?
A) An increase in investment caused by a technological innovation
B) An increase in consumption caused by an increase in interest income
C) An increase in tax revenue caused by a rise in GDP
D) An increase in saving caused by a rise in income
A
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If the economy were producing at point E and moved to point B the opportunity cost in terms of lost production of outboard motors would be
A. 16 units of outboard motors.
B. 14 units of outboard motors.
C. 12 units of outboard motors.
D. 10 units of outboard motors.
Use the information in the following table to answer the next question.(1) Interest Rate(2) Investment (billions of dollars)(3) Investment (billions of dollars)4%$100$8059070680607705086040In the table, investment is in billions. Suppose the Fed reduces the interest rate from 6% to 5% at a time when the investment demand declines from that shown by column (2) to that shown by column (3). As a result of these two occurrences, investment will ________.
A. increase by $20 billion B. increase by $10 billion C. decrease by $20 billion D. decrease by $10 billion
The efficient markets hypothesis
A) assumes that market participants form their expectations adaptively. B) applies rational expectations to the pricing of assets. C) applies to the stock market, but not to the bond market. D) indicates that the stock market is efficient, but not rational.
In a flexible exchange rate system, which of the following would NOT cause the U.S. dollar to depreciate relative to the British pound?
A. a decrease in demand for British goods in the United States B. a shift to the left in the supply of British goods to the United States C. a decrease in British demand for U.S. exports D. an increase in demand for British goods in the United States