The law of increasing opportunity cost says that:
A) opportunity costs of production always tend to increase.
B) increases in wages cause increases in the opportunity costs of production.
C) as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater.
D) along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less.
Ans: C) as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater.
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The direct effect of an increase in the money supply is to
A) raise interest rates as people increase their saving. B) decrease aggregate demand as people anticipate future economic problems. C) increase interest rates as people anticipate higher inflation in the future. D) increase aggregate demand as people try to spend their excess money balances.
One major fault with factor pricing analysis is that marginal productivity theory merely attempts to justify the income distribution that the capitalist system yields
a. True b. False Indicate whether the statement is true or false
The government budget deficit must be equal to the surplus
a. of saving over investment. b. in the current account in international trade. c. of saving over consumption. d. of saving over investment plus the trade deficit.
In the United States during the 1930s, politicians:
A. relied on government spending and taxation to pull the economy out of the depression. B. did not believe in using government spending and taxation because they feared the consequences of budget deficits. C. knew that the depression would eventually subside because of automatic stabilizers. D. deliberately relied on government spending and taxation even though they knew the depression would continue.