In the classical model, changes in interest rates will always ensure that
A. consumption equals income.
B. saving equals investment.
C. consumption equals production.
D. consumption equals investment.
Answer: B
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Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides enough seed for one-quarter of an acre of land. The opportunity cost of consuming another 100 bushels of corn today is
A) 100 bushels of corn next year. B) 25 bushels of corn next year. C) 10 bushels of corn next year. D) 2.5 bushels of corn next year.
Asymmetric information in a transaction can result in:
A. moral hazard. B. adverse selection. C. a lemons problem. D. All of these statements are true.
In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of output increases by 60% as well. This means that
a. the production process cannot be enhanced by technological advances. b. no mathematical representation of the relevant production function can be formulated. c. the relevant production function has the limits-to-growth property. d. the relevant production function has constant-returns-to-scale.
Economic analysis is a tool that
A. makes everyone rich. B. aids decision making. C. helps us forgive selfish people. D. helps us understand why people make mistakes.