Which is not one of the four basic questions used by economists to break down problems?
A. Why isn't everyone already doing it?
B. What are the trade-offs?
C. How will others respond?
D. What do others think?
Answer: D
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Explain the effects of an import quota on domestic production, consumption, and price
What will be an ideal response?
Secondary reserves are so called because
A) they can be converted into cash with low transactions costs. B) they are not easily converted into cash, and are, therefore, of secondary importance to banking firms. C) 50% of these assets count toward meeting required reserves. D) they rank second to bank vault cash in importance of bank holdings.
Unemployment insurance payments act as automatic stabilizers by:
a. allowing for more consumer spending during prosperity. b. making the unemployment rate worse during a recession. c. allowing for more consumer spending during a recession. d. changing the Phillips curve to a Laffer curve.
The hands-off view of the classical school rests on which of the following two simple propositions about markets?
a. Demand creates its own supply and markets are basically competitive. b. Industrial policy is inevitable and all prices are flexible. c. Market failure occurs and prices are rigid. d. Wages are sticky downward and market failure is inevitable. e. Markets are basically competitive and prices are flexible.