Carlos has been invited to go skiing for the afternoon with his friends. It will cost $40 for a lift ticket. It is likely Carlos will:
A. overvalue the benefit of skiing.
B. find it difficult to place a value on what he might do instead of skiing.
C. undervalue the opportunity cost of his afternoon.
D. All of these are true.
Answer: D
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Domestic monetary policy is essentially useless under
a. a floating exchange rate system. b. a fixed exchange rate system. c. the gold standard. d. conditions of balance of payments surpluses.
The current Social Security system works to the disadvantage of blacks primarily because the
a. average annual earnings of blacks are generally lower than other groups. b. average life expectancy of blacks is generally less than other groups. c. Social Security tax rates imposed on blacks are higher than those imposed on other groups. d. Social Security benefit formula is disadvantageous to blacks.
If purchasing power parity holds between the U.S. and China:
A. the real exchange rate must be 1. B. the U.S. must no longer have a trade deficit. C. the nominal exchange rate must be 1. D. China must no longer have a trade deficit.
If you liquidate $3,000 of your money market mutual fund and transfer the funds to your checking account, then initially, M1 will ________ and M2 will ________
A) not change; decrease B) increase; decrease C) increase; not change D) not change; not change