The economy’s capacity to produce is defined in such a way that
a) output cannot exceed capacity
b) the growth of potential GDP corresponds to the economy’s long run trend
c) the economy is always operating at its current potential
d) there is always a degree of slack or inefficiency in production, so output is always below capacity
e) when workers work overtime, capacity expands
b) the growth of potential GDP corresponds to the economy’s long run trend
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Consider the budget line in the above figure. If the consumer's income is $240, then the price of a book is
A) $20 per book. B) $24 per book. C) $12 per book. D) More information is needed to determine the price of a book.
According to the circular flow model, which statement is true?
a. Households with income from land and capital are wealthier than households with income only from labor. b. An entrepreneur who earns a wage must have at least two jobs. c. A household that owns no land or capital can earn only wages and/or profit. d. All services are produced by entrepreneurs. e. Some workers are only paid in interest and profit.
April lives in a heavily Democratic voting community. Every election, the Democratic candidates win by a large margin. Since April believed that she already knew what the outcome would be, she has not sought out candidate information or voted for the past few elections. Ben tells her she has displayed rational ignorance. What does Ben mean?
a. April is really showing a lack of intelligence by not getting involved. b. From April’s perspective, it makes sense not to waste her valuable time voting. c. April is not a mind reader and does not really know who will win the elections. d. April likes to make excuses and rationalize her inaction on important matters like voting.
When MC is rising, ATC
A. must be rising. B. must be falling. C. may be falling or rising. D. will remain constant.