Economics Essay

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If we assume that the MPC is 0.9, the multiplier will be
a) 5

  1. b) 4
  2. c) 10
    d) 9


The economy is at full-employment and spending increases, which spurs
inflation. This type of inflation would be called.
a) deflation

  1. b) demand-pull inflation
    c) core inflation
  2. d) hyperinflation
  3. e) cost-push inflation


If the interest rate rose, we would expect

  1. a) prices to fall
  2. b) investment to rise
    c) consumption to rise
  3. d) investment to fall

Which of these groups would be helped by inflation

  1. a) lenders
    b) borrowers
    c) savers
    d) workers
  2. e) retirees

    Bill receives a raise of $1000 per month. From this he spends an extra $800
    and saves an extra $200. His MPC would be
    a) 0.8

  3. b) 0.25
  4. c) 4
  5. d) 0.2
  6. e) 1.25

Which of the following scenarios best illustrates the concept of cyclical

  1. a) Marian loses her job because of a recession
    b) Sean quits his job to look for work that is more fun
    c) Ellen is unqualified for most jobs because she dropped out of high school
  2. d) Grace loses her job because of new automated machinery