A fundamental principle of economics is that every choice has a(n) _____________ cost.
a. established
b. variable
c. fixed
d. opportunity
d. opportunity
A fundamental principle of economics is that every choice has an opportunity cost.
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Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?
A) The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family. B) The Keynesian model assumes that workers can lose their jobs to foreign competition during economic downturns. C) The Keynesian model assumes that the level of real GDP is inflexible. D) The Keynesian model assumes that nominal wages are inflexible downward.
The opportunity cost to a cab driver of taking the day off increases when
A) it rains. B) more cabs enter the business. C) the price of gasoline rises. D) the weather is so pleasant everyone prefers to walk. E) many other cabs are out on the streets.
In the economy of Brightland, the commercial banks have deposits of $600 billion. Their reserves are $60 billion. All reserves are in deposits with the Central Bank and the commercial banks hold no excess reserves
There is $120 billion in Central Bank notes outside the banks, and there are no coins. a) What is the economy's monetary base? b) What is the quantity of money in the economy? c) Calculate the money multiplier. d) Suppose the Central Bank of Brightland undertakes an open market purchase of securities of so that the monetary base increases by $5 billion. By how much will the quantity of money change?
When analyzing the behavior of oligopolists, which of the following is crucial for the success of game theoretic analysis?
A. Payoffs do not need to reflect the true payoffs of the oligopolists, they just need to be greater than or equal to zero. B. Do not construct the payoffs of the oligopolists to be interdependent, as the payoff of one player usually does not affect the payoff of the other players. C. Assume that oligopolists always move simultaneously. D. Make sure the problem you are considering is of a one-shot or repeated nature, and you model it accordingly because the order in which players make decisions is important.