According to the classical model, more saving leads to more investment because
A) the people who save are the same people who invest.
B) the interest rate adjusts to keep investment equal to saving.
C) saving and investment are two sides of the same activity.
D) the interest rate is set by the federal government.
Ques. 2The largest category of the unemployed are
A) job losers.
B) reentrants.
C) job leavers.
D) new entrants.
Ques. 3Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well. If only the demand curve or the supply curve shifts, this suggests that
A) movies are a normal good and incomes have increased.
B) high salaries for Hollywood actors have increased the cost of movie making.
C) movie theaters have experienced an increase in their operating costs due to increases in the minimum wage.
D) admission prices for other types of entertainment, such as live shows and sporting events, have also declined.
Ques. 4Which of the following statements is TRUE of external costs?
A) External costs should not be corrected since people will bear the costs whether they are corrected or not.
B) There are no good ways to correct for the external costs.
C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources.
D) External costs should only be corrected for if the correction will not increase the market price.
Ques. 5In the above figure, what is the opportunity cost of one bushel of corn?
A) 1 bushel of soybeans
B) 0.5 bushel of soybeans
C) 2 bushels of soybeans
D) unable to determine
Ques. 6A capital gain results when
A) an asset is sold for more than it was purchased.
B) a debt is settled.
C) a person purchases a bond.
D) a person buys gold.
Ques. 7An inferior good is one for which
A) demand increases as income increases.
B) demand decreases as income increases.
C) the demand curve is vertical.
D) the demand curve slopes up.
Ques. 8A key assumption in the classical model is
A) sticky wages.
B) pure competition exists.
C) sticky prices.
D) the government plays a major role in economic problems.
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