If the slope of a straight line is positive, it implies that
A. if the price of one goes up, the price of the other will go up by exactly the same amount.
B. the change in the value of one of the variables causes an opposite and equal change in the value of the other variable.
C. the line is always vertical.
D. the correlation between the two variables being measured is inverse.
E. the values of the variables being measured move in the same direction.
Answer: E. The values of the variables being measured move in the same direction.
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Suppose a country produces only bikes and clothing. The country achieves an efficient allocation of resources when
A) it can't produce any more bikes unless it gives up clothing. B) it produces equal amount of bikes and clothes. C) the marginal social benefit of producing a bike equals the marginal social cost of producing a bike. D) the prices charged for the goods are as low as possible.
The base year matters for the computation of real GDP because
A) otherwise we cannot compute growth rates. B) relative prices can change over time. C) it allows an international comparison of GDP. D) it establishes a target for macroeconomic policy.
Which one(s) of the public debt forms is (are) marketable?
a. only the Treasury bond b. only the Treasury bill c. only the Treasury note d. Treasury notes, bills, and bonds e. only Treasury notes and bills
An appropriate government policy toward negative externalities is to
a. subsidize the activity that creates the negative externality. b. impose a tax or fine on the activity that creates the negative externality. c. pay money to the party that creates the negative externality. d. impose a tax on recipients of the negative externality.