Carefully define the following terms and explain their importance
a. variable
b. ray
c. slope
d. contour map
a. A variable is an object, such as price, whose magnitude is measured by a number. It is used to analyze what happens to other things when the size of that number changes.
b. A ray is a straight line emanating from a particular point an extending endlessly in one direction.
c. The slope of a line is change per unit from left to right. It is measured by the change in the variable on the vertical axis divided by the change in the variable on the horizontal axis.
d. A contour map shows all points representing different combinations of two variables, e.g., combinations of labor and raw materials capable of producing a given output. (Other examples of contour maps could be drawn from later chapters.)
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If the quantity of the variable on the y-axis increases by 3 when the quantity of the variable on the x-axis increases by 4, then the slope of the curve equals
A) 3. B) 4. C) 3/4. D) 4/3. E) 1.
Suppose oil prices suddenly begin to rise and the Fed announces that the increase in oil prices are not expected to generate excessive inflation
If the Fed is incorrect in its assumption that rising oil prices will not generate excessive inflation and the inflation rate increases before the Fed takes corrective action, then other things equal, this would result in ________ and ________. A) the IS curve shifting to the right; a movement up the Phillips curve B) the IS curve shifting to the left; a movement down the Phillips curve C) the MP curve shifting up; a movement up the Phillips curve D) the MP curve shifting down; a movement down the Phillips curve
Dollarization is a policy action that
A) tries to stabilize the value of the local currency vs. the U.S. dollar. B) adopts the currency of another country as the national medium of exchange. C) mimics policy actions taken by the U.S. Federal Reserve. D) outlaws the holding of foreign currencies other than the U.S. dollar.
A manager invests $20,000 in equipment that would help the company reduce it's per unit costs from $15 to $12 . He expects the equipment to be in use for the next seven years. After two years, he realizes that if he outsourced the production, the unit cost would be $7 instead. At this point what should the senior manager do?
a. Charge the manager for the next five years of depreciation b. Write off the equipment as sunk cost and allow for outsourcing since it is cheaper c. Not allow for outsourcing since the equipment is good for another five years d. None of the above