Education is an example of
a. investment in physical capital.
b. investment in human capital.
c. investment in natural resources.
d. technological change.
e. none of the above.
b. investment in human capital.
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Suppose you can earn 5 percent on your savings account if you deposit $500 in it. The inflation rate is 3 percent. The opportunity cost of holding the $500 as money is
A) $100. B) $525. C) $80. D) $30. E) $25.
If the Federal Open Market Committee decides to decrease the money supply, it will
a. sell government bonds. b. purchase corporate bonds. c. purchase government bonds. d. reduce interest rates.
Which of the following statements best describes the substitution bias in the construction of the CPI?
A. Not taking into account that consumers alter their buying habits as new products come into being and lifestyles change, for example, the rising popularity of cell phones instead of land-line phones. B. Not accounting for the fact that consumers are effectively getting more product for their money because technological changes have led to improvements in quality and lower production costs over time. C. The failure to recognize that over time consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives. D. The failure to capture the fact that consumers have made substitutions in their shopping habits: shifting from high-priced department stores to lower-priced discount stores.
Refer to the data provided in Table 17.5 below to answer the following question(s). The table shows the relationship between income and utility for Lucy. Table 17.5 IncomeTotal Utility $00$10,00010$20,00020$30,00030$40,00040Refer to Table 17.5. From the table, we can see that Lucy is
A. risk-loving. B. risk-averse. C. risk-neutral. D. We cannot determine Lucy's attitude toward risk from the table.