An individual who suffers from money illusion will
A) feel that a doubling of prices and income improves his economic position.
B) concentrate on relative prices.
C) never be fooled by the impact of price changes on the purchasing power of income.
D) try to use counterfeit money.
A
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More people started building houses in earthquake-prone regions when the government of Polonia launched an insurance program for houses in this region. This is an example of ________
A) adverse selection B) a positive externality C) moral hazard D) herd behavior
If a perfectly competitive firm faces a market price of $3 per unit, and it decides to produce 30,000 units, the market price will likely:
A. increase. B. decrease. C. stay the same. D. increase initially and then decrease.
Suppose the government changed the tax laws, with the result that people were encouraged to consume more and save less. Using the loanable funds model, a consequence would be
a. lower interest rates and lower investment. b. lower interest rates and greater investment. c. higher interest rates and lower investment. d. higher interest rates and higher investment.
Output per unit of input measures
A. The inequality trap. B. The investment rate. C. Per capita GDP. D. Productivity.