Economic theory is a necessity, not a luxury. This statement is true because theory
A. always leads to practical and useful policy.
B. can prevent depressions in the economy.
C. substitutes for vast amounts of data.
D. provides a structure for organizing and analyzing data.
E. always leads to accurate predictions.
Answer: D
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All of the following are true regarding tacit collusion except which one?
A) It harms buyers. B) It is more likely when firms' costs are closely related and their products are close substitutes. C) It is more likely when barriers to entry are low. D) It is an informal, unstated agreement.
All else remaining equal, if the amount of money market deposit accounts increase, this will increase the size of:
a) only M1. b) only M2. c) M1 and M2. d) neither M1 nor M2.
Economic advisers who fear that the economy is growing too rapidly would recommend that the government decrease spending and/or increase taxes.
Answer the following statement true (T) or false (F)
The table above shows Tom's total utility from milkshakes and sodas. What is the marginal utility of the eighth soda?
A) 32 units B) 20 units C) 10 units D) 8 units