The part of consumption that is independent of disposable income is called
A. personal consumption.
B. automatic consumption.
C. fixed consumption.
D. autonomous consumption.
Answer: D
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Under fixed exchange rates, a central bank
a. adjusts the money supply automatically and immediately to changes in the demand and supply of foreign exchange b. need hold no reserves of foreign exchange c. enforces the fixed exchange rate by refusing to buy or sell foreign exchange whenever changes occur in demand or supply d. may find its reserves fluctuating as demand and supply conditions change e. has no authority to buy or sell foreign exchange
Economists consider the long run as a period of more than one year.
Answer the following statement true (T) or false (F)
Which of the following changes will shift the money demand rightward?
a. An increase in the price level b. A decrease in real GDP c. A decrease in the nominal interest rate d. An increase in the nominal interest rate e. A decrease in the price level
Which of the following problems associated with asymmetric information can be avoided by using a product warranty?
a. Lemons problem b. Problem of adverse selection c. Moral Hazard d. Problem of blind sight