Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behavior?
A) Some health club members suffer minor injuries that prevent them from working out.
B) Some people are overly optimistic about their future behavior.
C) Some people fail to treat their membership fees as sunk costs.
D) Some members receive utility from activities they believe are popular.
Answer: B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
If real GDP declines in a given year, nominal GDP ________.
A. must also be increasing B. may either rise or fall C. must also be declining D. is likely to remain constant
The liquidity-preference model was first introduced in:
A. 2008 by Ben Bernanke. B. 1936 by John Maynard Keynes. C. 1776 by Adam Smith. D. 1970 by John Kenneth Galbraith.
Sally and Joe recently graduated from college, both majoring in history. Joe took a prestigious job as a legal clerk. Sally took a job as a specialist in fighting forest fires. Both received additional training before entering their jobs. Who will likely earn a higher salary and why?