Mark has $2000 saved for a trip at Spring Break. Over Winter Break, he decide to buy gifts for his family and puts over $500 on his credit card which charges 10% interest on the outstanding balance every month. He pays off the credit card bill gradually over the next two months. An economist would categorize that behavior as:
A. misallocated.
B. rational.
C. irrational.
D. scarce.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
A newspaper headline asserts: "Rising demand pulls up copper prices." The headline
A) is claiming demand determines price (rather than price determining demand). B) is claiming more copper would be demanded at higher prices. C) is claiming prices will fluctuate indefinitely. D) is guilty of all three errors mentioned above. E) makes perfectly good sense from the standpoint of economic theory.
Substitution bias
a. is one factor that causes the Consumer Price Index to underestimate the inflation rate b. is caused by the poor quality of many products c. is one of the primary causes of inflation d. involves consumer behavior that helps explain why the Consumer Price Index overestimates the inflation rate e. suggests most economists substitute other price indices for the flawed Consumer Price Index
Futures markets for agricultural commodities allow to reduce
A. price and profit uncertainty in farming. B. price uncertainty in farming. C. price and output uncertainty in farming. D. price, output, and profit uncertainty in farming.