A policy of fiscal austerity could have difficulty lowering the debt-to-GDP ratio because it might:
A. lower both GDP growth and government revenue.
B. lower potential output and government spending.
C. raise potential output and government spending.
D. raise both GDP and government revenue.
Answer: A
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Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is ________, and his income is ________
A) $5 million a year; $100 million B) $100 million; $5 million a year C) $100 million; $105 million D) $5 million a year; $100 million a year
Scott and Tom have dinner together at a new restaurant, and they discover that the portions are huge but taking home leftovers is not allowed. When both decide they are full, Scott forces himself to finish the rest of the food on his plate even though he doesn't really want to, while Tom asks the waiter to remove his plate while it still contains some food. How would an economist describe this behavior?
A. Scott acted rationally, because the food otherwise would have been thrown away. B. Tom acted rationally, maximizing his utility. C. Both Tom and Scott acted rationally. D. Both Tom and Scott acted irrationally.
When a second firm enters a monopolist's market:
A. the former monopolist's average cost increases as its output level decreases. B. the demand curve facing the former monopolist shifts to the right. C. the market price rises as the average cost increases. D. None of these
The four important characteristics that define a perfectly competitive market are:
A. standardized good, same information for buyer and seller, low transactions costs, participants are price takers. B. standardized information, finished good, no transactions costs, participants are price makers. C. standardized good, full information, no transactions costs, participants are price makers. D. standardized good, full information, no transactions costs, participants are price takers.