What is scarcity, and why is it a fundamental concept in economics?
What will be an ideal response?
Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants. Scarcity is a fundamental concept in economics because economics is the study of the choices people make to attain their goals, given their scarce resources.
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A growing government budget deficit and national debt reduces economic growth because
A) it insures that future generations will have to pay the debt. B) it reduces public investment. C) it reduces household saving. D) it diverts private savings from the financing of private investment.
Why is frictional unemployment considered to be productive?
A. Firms do not hire a worker until they find the most educated worker. B. The demand for highly skilled workers exceeds the supply of highly skilled workers when there is frictional unemployment. C. Frictional unemployment leads to a decrease in the unemployment rate. D. There are more potential workers seeking jobs than there are jobs for workers when there is frictional unemployment. E. Search activities of workers and firms resulting in frictional unemployment improve the allocation of resources.
Why do government debt managers often use interest-rate swaps?
What will be an ideal response?
An increase in the number of consumers in a market would cause
A) an increase in quantity demanded. B) an increase in quantity supplied. C) an increase in demand. D) an increase in supply.