Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that
a. trade can make everyone better off.
b. people face trade-offs.
c. rational people think at the margin.
d. people respond to incentives.
b
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Explain how some structural changes can increase the natural unemployment rate while other structural changes can decrease the natural unemployment rate
What will be an ideal response?
Excess reserves can be found by subtracting required reserves from total reserves
a. True b. False
One reason the Fed tolerates ongoing inflation is because it
a. believes that the CPI understates the actual inflation rate b. believes that the CPI overstates the actual inflation rate c. accepts the idea that a zero inflation rate would make labor markets work more smoothly d. wants to focus more on price stability than on full employment e. is uncertain about the long-run stability of the Phillips curve
A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500. From this, she can determine:
A. her profits are not being maximized. B. she has earned zero economic profits. C. she has earned economic profits of $1,000. D. she has earned economic profits of $1,500.