The average benefit of n units of an activity is the:
A. extra benefit from carrying out one additional unit of the activity.
B. n divided by the total benefit of n units.
C. n times the total benefit of n units.
D. total benefit of n units divided by n.
Answer: D
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If the First National Bank has a gap equal to a negative $30 million, then a 5 percentage point increase in interest rates will cause profits to
A) increase by $15 million. B) increase by $1.5 million. C) decline by $15 million. D) decline by $1.5 million.
Suppose there was a sharp reduction in stock prices and a sharp increase in the world price of crude oil. Within the framework of the AD/AS model, how would these two changes influence the U.S. economy?
a. The lower stock prices would increase SRAS, and the higher crude oil prices would reduce AD; as a result, there would be downward pressure on the general level of prices. b. The lower stock prices would reduce SRAS, and the higher crude oil prices would increase AD; as a result, there would be upward pressure on the general level of prices. c. The lower stock prices would increase AD, and the higher crude oil prices would increase SRAS; as a result, output would tend to increase. d. The lower stock prices would reduce AD, and the higher crude oil prices would reduce SRAS; as a result, output would tend to decline.
When looking at a graph of nominal and real interest rates you notice that nominal rates always lie above real rates. From this you conclude
a. there were serious episodes of deflation in the time frame represented on the graph. b. consumer prices were always rising in the time frame represented on the graph. c. the economy never experienced a recession in the time frame represented on the graph. d. GDP was always increasing for the time frame represented on the graph.
Jessica's workplace is collecting money for a lottery pool. Each employee can choose to contribute $50, with a 1 in 600,000 chance of winning $1 million. If Jessica chooses not to contribute to the lottery pool, she is probably experiencing:
A. status quo bias. B. loss aversion. C. the endowment effect. D. positive framing.