In the income-expenditure framework, if planned aggregate expenditures are greater than real gross domestic product (GDP), _____.
a. the price level will fall
b. consumption will fall
c. inventories will increase
d. inventories will decrease
e. consumption will decrease
QUESTION 2According to Elinor Ostrom's view of The Tragedy of the Commons:
a. The only way to prevent the collapse of the commons is government intervention.
b. The only way to prevent the collapse of the commons is to privatize the commons so that it is owned by a single individual.
c. Individuals will create institutions to prevent the collapse of the commons.
d. Individuals will use the commons beyond the socially efficient point.
QUESTION 3Suppose the reserve requirement is 15 percent. Which of the following is true?
a. The simple money multiplier is 15.
b. The simple money multiplier is 1/15.
c. The simple money multiplier is 30,000.
d. The simple money multiplier is 1/30,000.
e. The simple money multiplier is 1/0.15.
QUESTION 4If planned spending exceeds planned output in an economy, the result is a(n) _____.
a. increase in inventories
b. decrease in gross domestic product
c. decrease in imports
d. increase in government purchases
e. unintended decrease in inventories
QUESTION 5According to Garrett Hardin's view of The Tragedy of the Commons:
a. Externalities will be internalized by the market.
b. Individuals will use the commons up to the point where marginal benefits equal marginal social costs.
c. Individuals will create institutions to prevent the collapse of the commons.
d. Individual will use the commons beyond the socially efficient point.
QUESTION 6If the simple money multiplier is 5, the required reserve ratio must be equal to _____.
a. 5 percent
b. 0
c. 10 percent
d. 50 percent
e. 20 percent
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