Conventional budget accounting practices tend to overstate deficits in inflationary periods because they
a. ignore the inflation tax.
b. confuse repayment of principal with real interest expenditures.
c. double count some expenditures.
d. understate real interest rates.
b
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Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's explicit costs?
A. $64,000 B. $72,000 C. $8,000 D. $12,000
Increasing productivity in a society
a. always results in a better quality of life as society views it. b. can never make a nation poorer. c. guarantees that personal services will cost less. d. makes improved personal services available to everyone.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.
The graph below shows part of a consumer's indifference map for units of coffee and tea, where I1 and I2 represent indifference curves. Which of the following statements is correct?
A. The consumer prefers E to F
B. The consumer prefers C to A
C. The consumer likes B and D equally well
D. The consumer likes D better than E