In the Keynesian aggregate consumption-income graph, the vertical distance between the consumption ...

In the Keynesian aggregate consumption-income graph, the vertical distance between the consumption function and the 45-degree line shows the:
 a. amount of savings (or dissavings) at that level of disposable income.
  b. amount of disposable income at that level of consumption.
  c. increase in planned business investment at each level of inflation.
  d. increase in income that causes each change in real GDP.

QUESTION 2

Which of the following offers theories to explain why the government, like the private sector, may also fail?
 a. Social economics.
  b. Public choice theory.
  c. Rational expectations theory.
  d. Keynesian economics.

QUESTION 3

When a nation totally bans trade with another country, it is imposing a(n):
 a. tariff. b. embargo.
  c. quota. d. none of these.

QUESTION 4

The consumption function has a slope less than one because:
 a. as disposable income increases, the real rate of interest will decline.
  b. saving and consumption are equal at all levels of income.
  c. as disposable income increases, consumption expenditures increase by an amount less than the increase in income.
  d. as disposable income increases, consumption expenditures increase by an amount greater than the increase in income.

QUESTION 5

According to the shortsightedness effect, politicians tend to favor projects with:
 a. short-run benefits and short-run costs.
  b. short-run benefits and long-run costs.
  c. long-run benefits and short-run costs.
  d. long-run benefits and long-run costs.

QUESTION 6

If it costs the DuPont Chemical Company more to make the chemical flaxinate in the United States than it does to make it in Formosa, the Formosans must have:
 a. lower demand for flaxinate.
  b. tariffs on flaxinate.
  c. inefficient markets.
  d. a more favorable political environment.
  e. an absolute advantage in flaxinate production.