The NAIRU:
A. can change over time.
B. is difficult to measure.
C. occurs at the economy's level of potential output.
D. All of these statements are true.
Answer: D
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Someone who turns down an opportunity to purchase a Bible for $5 and then immediately pays $5 to attend a movie thereby expects to obtain more satisfaction from seeing the movie than from
A) cultivating the spiritual life. B) deepening his religious faith. C) owning the Bible just offered to him. D) reading the Bible.
Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account would have earned 3 percent interest. In order to properly account for all costs of her business, Tina must not forget:
A. the opportunity cost of $2,600. B. the opportunity cost of $600. C. the fixed cost of $20,600. D. the fixed cost of $20,600 and the opportunity cost of $600.
Discuss the advantages of using an income tax system such as the one discussed in this chapter, as opposed to a consumption tax.
What will be an ideal response?
Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run
a. the price level and real GDP will both rise. b. the price level and real GDP will both fall. c. neither the price leave nor real GDP will change. d. All of the above are possible.