Explain the term "economics."
What will be an ideal response?
Economics is the study of the choices people make to attain their goals, given their scarce resources.
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If asset A is a 30-year U.S. Treasury bond yielding 9 percent and asset B is a 30-year corporate bond issued by General Motors that also yields 9 percent, risk averse investors would
A) prefer asset A. B) prefer asset B. C) be indifferent between the two assets. D) differ according to their rate of time preference.
Any increase in autonomous spending will
A) shift the IS curve to the left. B) shift the IS curve to the right. C) cause a movement down along an IS curve. D) cause a movement up along an IS curve.
A profit-maximizing, monopolistically competitive restaurant serves 60 burgers a day at a total cost of $180 and earns a total profit of $180. In the long run, everything else equal, the
A. restaurant will charge more than $6 per burger. B. restaurant’s average total cost will rise and its total revenue will fall. C. restaurant will sell more burgers at a lower average profit per burger. D. All of the responses are correct.
From the end of 2005 to the end of 2006, the United States ran a deficit of about $309 billion. The debt at the start of this period was about $4,592 billion. Which of the following combinations of inflation and real GDP growth would have allowed the government to run this deficit while keeping the ratio of real GDP to the debt about the same?
a. about 3% inflation and about 2.2% real GDP growth b. about 3% inflation and about 3.2% real GDP growth c. about 3.4% inflation and about 3.3% real GDP growth d. about 3.4% inflation and about 4% real GDP growth