Explain what an economist means when he says, "You don't find any $10 bills on the sidewalk."
What an economist means by this statement is that people do not pass by net benefits. Whenever the marginal benefits of some activity exceed the marginal costs of that activity, net benefits result. The benefits of having another $10 exceed the costs of stooping down to pick up the bill, resulting in a net benefit from picking up the bill.
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An improvement in a firm's technology that reduces its production costs will result in a(n):
a. rightward shift of the supply curve. b. increase in supply. c. increase in quantity supplied at any given price. d. all of these are true.
In the short run, when the central bank increases the quantity of money, what happens to real balances?
a. They do not change, since prices will rise by the same proportion. b. They will fall, since prices will rise by a greater proportion. c. They will rise, since prices overall will fall. d. They will rise, since prices will not change in the short run.
Considering only its direct effect on income, contractionary fiscal policy tends to:
A. decrease income and imports, raising the trade deficit. B. decrease income and imports, lowering the trade deficit. C. increase income and imports, lowering the trade deficit. D. increase income and imports, raising the trade deficit.
The Fed directly controls long-term interest rates
Indicate whether the statement is true or false