Which of the following is a difference between accounting profit and economic profit?
a. Accounting profit includes only the implicit costs of a firm, while economic profit includes only the explicit costs of the firm.
b. Economic profit includes explicit and implicit costs of a firm, while accounting profit includes only explicit costs of the firm.
c. Accounting profit is calculated for the current year, while economic profit can be calculated only for previous years.
d. Accounting profit is the profit that has already been made by a firm while economic profit is the prediction of the firm's profit in future.
b
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
At most museums, you can either buy a year-long membership that gives you free access to the museum any time, or you can pay a daily fee every time you visit. (Assume for purposes of this exercise that everyone can in principle afford the year-long membership.)
A. Those who choose to pay the daily fees all place the same value on their marginal museum visit. B. We cannot tell how much value anyone places on the marginal museum visit because we cannot compare utility across individuals. C. If someone is indifferent between the two options, she will go to the museum at least as much if she chooses the year-long membership than if she does not. D. Both (a) and (c) are true. E. Both (b) and (c) are true.
Although the pegged exchange rate between the yuan and the dollar has undervalued the yuan, China had been reluctant to abandon the peg for fear that abandoning the peg would
A) increase Chinese holdings of dollars. B) reduce exports and reduce economic growth. C) reduce capital inflows. D) increase exports and increase the current account deficit.
If a consumer is spending a small portion of his or her income on a good, then the demand for the good is likely to be inelastic
a. True b. False Indicate whether the statement is true or false