One mechanism through which increasing public debt may impact the economy is that the resulting
A) increased competition for funds increases interest rates and causes a reduction in investment.
B) increased competition for funds decreases interest rates and causes an increase in investment.
C) decreased competition for funds decreases interest rates and causes a reduction in investment.
D) decreased competition for funds decreases interest rates and causes an increase in investment.
Ques. 2What will happen to the annual rate of growth of per capita real GDP if real GDP grows at a constant rate of 4.5 percent and the annual rate of population growth goes from 3 percent to 3.5 percent?
A) The annual rate of growth of per capita real GDP will increase from 7.5 percent to 8 percent.
B) The annual rate of growth of per capita real GDP will increase from -1.5 percent to -1 percent.
C) The annual rate of growth of per capita real GDP will remain unchanged.
D) The annual rate of growth of per capita real GDP will decrease from 1.5 percent to 1 percent.
Ques. 3Which factor would cause a movement along the demand curve for pizza?
A) an increase in the number of students in town
B) a renewed preference for Italian food
C) a drop in the price of pizza
D) an increase in average income
Ques. 4Economics may be referred to as a(n) ________ science, meaning that data is looked at to see whether assertions are correct.
A) empirical
B) exact
C) assumptive
D) soft
Ques. 5The classical model indicates that at the equilibrium interest rate, saving is
A) equal to investment.
B) greater than investment.
C) unnecessary for investment.
D) less than investment.
Ques. 6If the government sets a minimum price at which a good or service can be sold, it thereby creates
A) a price ceiling.
B) a black market price.
C) a price floor.
D) an illegal price control.
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