Question

1) Money is __________ store of value because of __________.

Select one:

a. not a; inflation

b. a perfect; inflation

c. an imperfect; inflation

d. a perfect; its universal acceptance

2) Suppose an economy is at full-employment equilibrium at a GDP of $25 billion and investment declines by $4 billion. According to Keynes, this economy will:

Select one:

a. Reach a new equilibrium at a level of output between $21 billion and $25 billion.

b. Reach a new equilibrium at $21 billion.

c. Eventually reach a new equilibrium at an output level significantly less than $21 billion.

d. Quickly self adjust back to full employment.

3) Say's Law states that:

Select one:

a. Production will create the income needed to purchase all the goods produced.

b. Recessions are caused by a lack of enough Aggregate Demand.

c. Wages and prices are inflexible, which prevents the achievement of a market equilibrium.

d. Decreased prices lead to decreased production.

4) Inflation is defined as an increase in:

Select one:

a. real GDP.

b. all consumer products.

c. real wages of workers.

d. the average price level.

Answer 1

1. Option a.

Not a inflation

Money may not even be the best store of Value because it depreciates inflation.

2. Option c

Eventually reach a new Equilibrium at$21 billion.

3.option a.

Production will create the income needed to purchase all the goods produced.

A product is no sooner created than it from that instant affords a market for other products to the full extent of its own value.

As the value we can buy is equal to the value we can produce the more.

4. Option a. Real GDP

Due to inflation GDP increases and does not actually reflect the true growth in an Economy.