If the price of A is $12 and the price of B is $3, the budget line tells us that a consumer in effect can trade:
A. 12 units of A for 3 of B.
B. 1 unit of A for 4 of B.
C. 1 unit of A for 3 of B.
D. 1 unit of B for 4 of A.
Answer: B
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Firms that have high cost of monitoring, choose their employees much more carefully because
a. They are afraid that the employee would be too productive b. They are more confident that after getting the job, the employee would not shirk c. They are afraid that without screening, the employee would be more likely to shirk d. B & C
A reserve requirement of 10 percent means a money multiplier of: a. 1
b. 9. c. 10. d. 11.1.
Which of the following is not a seriously proposed way to solve the problems of funding Social Security?
a. increase Social Security taxes b. reduce future benefits c. increase the number of years of earnings used to determine benefits d. create a Social Security national lottery e. change the law to allow the Social Security system to invest some of the trust funds in the private sector
Where does the money for investment in physical capital come from? It largely comes from:
A. donation by foreign countries. B. government subsidies. C. the savings of ordinary households. D. the reinvestment of funds from businesses.