John is a user of WhatsApp Messenger. When he initially started using it, the messenger was not very popular among his friends and John did not spend much time on it
As more and more of John's friends started using the messenger, the messenger's value to John increased substantially. What kind of externality is reflected in this example?
This is an example of a network externality. A network externality occurs when a product's value increases as more consumers begin to use it. As more of John's friends started using the messenger, his value for the messenger increased as he could now communicate with more people using the messenger.
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Use the following table to answer the next question.YearNominal Income (dollars)CPIReal Income (dollars)1$44,600130 2$48,200 $35,1833$51,000139 What is the value of real income in Year 1?
A. $343 B. $44,600 C. $57,980 D. $34,308
According to the efficiency wage model, during a recession, firms will not reduce real wages because
A) unions would go on strike, reducing profitability. B) this would reduce worker effort and productivity. C) the equilibrium real wage has increased. D) legally, they can't.
If the Fed is facing ________, the bank lending channel provides one explanation for why monetary policy may still be effective even when short-term nominal interest rates equal 0%
A) an upward-shifting Phillips curve B) stagflation C) the zero bound constraint D) an economy where real GDP has surpassed potential GDP
Suppose the best investment you could make with $100,000 in cash is to purchase a government bond that pays 14 percent interest per year
If you decide to invest the money in your own business instead of buying the government bond, the opportunity cost of this financial capital is A) $1,400 per year. B) $100,000 per year. C) $14,000 per year. D) zero, because you already had the $100,000.