It has been said that “economics is the science of common sense.” Is economics synonymous with common sense?
What will be an ideal response?
A large portion of economics will agree with common sense, such as higher prices leading to a cutback in purchases or more government spending creating jobs. But economic logic provides findings that may conflict with a noneconomist’s common sense, such as tariffs and quotas costing, rather than creating, jobs. Economics may be the science of common sense, but that common sense must include a logical way of thinking.
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Nonactivists of policies contend that a policy of shifting the aggregate ________ curve will be costly because it produces ________ volatility in both the price level and output
A) supply; less B) supply; more C) demand; less D) demand; more
The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved
What will be an ideal response?
The Fed has been able to achieve a zero rate of inflation throughout most of the 1990s
a. True b. False
Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour
a. Susan has an absolute advantage over Paul in washing windows. b. Susan has a comparative advantage over Paul in washing windows. c. Paul has a comparative advantage over Susan in ironing shirts. d. All of the above are correct.