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The Supply-Side Economics school of thought emphasizes economic growth through:
AIncreasing aggregate demand via government deficit spending
BExpanding the money supply at a fixed annual rate
CTax cuts, deregulation, and incentives to boost aggregate supply
DStrict price controls and trade barriers
The Gibson Paradox refers to an empirical observation that historically contradicted classical monetary theory by showing a positive correlation between:
AUnemployment and inflation
BMoney supply and real output growth
CSavings rate and capital accumulation
DInterest rates and general price levels
The High-Powered Money supply equation is represented as:
AH = C + R (Currency in circulation + Bank Reserves)
BH = M1 + M2
CH = Demand Deposits + Savings Deposits
DH = GDP / Money Velocity
The Credit Multiplier (Deposit Multiplier) in a commercial banking system equals:
ACRR / Total Deposits
B1 / Cash Reserve Ratio (1 / CRR)
C1 - Marginal Propensity to Save
DTotal Loans / Total Capital
A Nash Equilibrium in game theory occurs when:
ANo player has an incentive to unilaterally change their chosen strategy
BBoth players achieve maximum theoretical payouts
CPlayers alternate choices in every round
DOne player forces the other to exit
The substitution effect of a price change according to Hicks is isolated by keeping:
AReal income (utility level) constant
BNominal money income constant
CTotal expenditure constant
DMarginal utility of money constant
Slutsky’s substitution effect differs from Hicks’s because Slutsky holds constant the consumer’s:
AUtility level
BPurchasing power (ability to buy the original basket of goods)
CMarginal rate of substitution
DNominal income without any tax adjustment
An Engel Curve shows the relationship between:
AQuantity demanded of a good and its market price
BQuantity supplied of a good and factor costs
CQuantity demanded of a good and consumer income level
DPrice of a good and price of its substitute
If the income elasticity of demand for a good is negative, the good is classified as an:
ANormal good
BLuxury good
CNecessity good
DInferior good
The Envelope Curve in cost theory refers to the firm’s:
ALong-Run Average Cost (LRAC) curve
BShort-Run Marginal Cost (SMC) curve
CAverage Variable Cost (AVC) curve
DTotal Fixed Cost (TFC) curve