Answer the following questions true (T) or false (F)
1. Examining the conditions that could lead to inflation in an economy is an example of a microeconomic topic.
2. Suppose that to move more people off the wait list for organ donations, surgeons and hospitals are developing a market for organ swapping. This is an example of a macroeconomic topic.
3. Examining the conditions that could lead to economic growth is an example of a macroeconomic topic.
1. FALSE
2. FALSE
3. TRUE
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Suppose the price of crude oil drops from $150 a barrel to $120 a barrel. The quantity bought remains unchanged at 100 barrels. The coefficient of price elasticity of demand in this example would be
A) -0.5. B) infinity. C) -1.0. D) 0.
An expansionary gap is equal to: a. real GDP minus nominal GDP
b. nominal GDP minus real GDP. c. the actual short-run output minus potential output. d. the actual price level minus expected price level. e. the actual long-run real GDP minus actual short-run disposable income.
With regard to the business cycle, most modern economists believe that
a. once a recession starts, market forces are incapable of preventing the economy from plunging deeper and deeper into a depression. b. market economies will experience lengthy periods of recession pretty much regardless of what policy makers do. c. the economy's self-corrective mechanism will quickly restore full employment regardless of the choices made by policy makers. d. lower real interest rates and reductions in real resource prices will help direct an economy out of recession.
If the Federal Reserve decreases the money supply, then initially there is a
a. shortage in the money market, so people will want to sell bonds. b. shortage in the money market, so people will want to buy bonds. c. surplus in the money market, so people will want to sell bonds. d. surplus in the money market, so people will want to buy bonds.