According to economic theory, how do people make decisions?
A. They make decisions in the same manner as their parents did.
B. They make decisions based on their own self-interest.
C. They make decisions by looking at what others have done in the same situation and then doing the opposite.
D. They make decisions by looking at what others have done in the same situation and then doing the same.
Answer: B
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Use the figure below to answer the following question.
What is the amount of total surplus without the excise tax?
A. $100 B. $32 C. $4 D. $80
Which one of the following statements is TRUE of the Consumer Price Index?
A) It does not take account of the price of imported goods and services. B) It does not take into account the price of used goods. C) It understates the true rate of inflation. D) It measures changes in prices of a fixed basket of goods.
According to the Solow model of economic growth, if per capita savings, s (Y/N)0, exceeds required steady state investment, (n + d) K/N, then
A) per capita output declines. B) capital per capita increases. C) capital per capita decreases. D) steady state growth characterizes the economy.
In economics, the term _______________ describes spending that pays for the production and accumulation of capital goods.
a. investment b. capital c. money