Answer the following statements true (T) or false (F)
1. According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling.
2. Have a high fixed salary is what motivates entrepreneurs to make prudent decisions is dealing with business risk.
3. Government bailouts of failing businesses, like banks during the recent economic crisis, will tend to reduce the motivation among entrepreneurs to make prudent decisions is dealing with business risk.
4. College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms.
1. FALSE
2. FALSE
3. TRUE
4. TRUE
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If the U.S. government places tariffs on imports from countries that have been accused of deliberately undervaluing their currencies, the price of these imports will ________ and the demand for the undervalued currency will ________
A) rise; fall B) fall; rise C) rise; rise D) fall; fall
After a period of price stability in the 1990s, housing prices increased dramatically during 2002-2005 because
a. regulations designed to make housing more affordable increased the demand for housing and drove housing prices upward. b. regulations designed to make housing more affordable decreased the number of sub-prime loans and made home buying a safer investment. c. mortgage lending standards tightened, and therefore mortgage loans for housing were only available to buyers purchasing highly expensive homes. d. home buyers were putting more money down and requiring more return on their investment, driving housing prices up.
If a drought increases the price of corn by 10% and decreases the quantity of corn demanded by 5%, then demand for corn is
A. elastic and total revenue to corn farmers will decrease. B. inelastic and total revenue to corn farmers will increase. C. inelastic and total revenue to corn farmers will decrease. D. elastic and total revenue to corn farmers will increase.
Suppose earnings are given by E = $50 + $20(24 ? L), where E is earnings and L is the hours of leisure. What is the price to the worker of consuming an additional hour of leisure?
A. $24 B. $26 C. $30 D. $20