The only way that a society can produce outside the production possibilities curve is
A) through economic growth.
B) by producing efficiently.
C) by obeying the Law of Increasing Additional Cost.
D) to use the concept of opportunity cost.
Answer: A
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If there is no Ricardo-Barro effect, a government budget deficit increases
A) private savings and lowers the real interest rate. B) private savings and raises the real interest rate. C) the demand for loanable funds and raises the real interest rate. D) investment demand and lowers the real interest rate. E) the supply of loanable funds and raises the real interest rate.
Assume the Congress approves increased drilling for oil in the U.S. to address the current energy shortage. People who are in favor of this policy argue that, ceteris paribus, this would cause:
A) an increase in the equilibrium price and quantity of oil. B) a decrease in the equilibrium price and quantity of oil. C) a decrease in equilibrium price and increase in the equilibrium quantity of oil. D) an increase in equilibrium price and a decrease in the equilibrium quantity of oil.
Today John says: "I will start working out tomorrow." Yet, as tomorrow arrives he doesn't. This is an example of
A) time inconsistent preferences. B) time consistent preferences. C) exponential discounting. D) future-biased preferences.
Which of the following definitions or statements is not correct?
a. The entire business cycle can be measured from one peak to the next peak. b. Oddly enough, if you consider the entire business cycle, they all have the same duration. c. The entire business cycle can be measured from one trough to the next trough. d. An expansion occurs when broad-based economic activity improves significantly and lasts for more than a few months. e. A recession occurs when there is a significant contraction in economic activity that is spread broadly across the economy and lasts for more than a few months.