The economy has been compared to a supertanker on the ocean to make the point that
A) the larger the economy, the less it is influenced by other economies (the weather).
B) it takes time for a policy change to overcome the economy's momentum and change its direction (as in steering an immense ship).
C) a random shock affects all parts of the economy in the same way (as all of a ship rises or falls together with the waves).
D) the larger the economy, the worse it is for the rest of the world when it goes into a recession (there is enough oil in a supertanker for a spill to stretch across the ocean).
B
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Suppose favorable weather conditions temporarily raise the marginal productivity of existing capital. Weather conditions are expected to return to normal next year, so there is no change in the expected marginal productivity of future capital. In this situation, the interest rate will
a. rise. b. fall. c. remain unchanged. d. react unpredictably.
Joe is self-employed in a store that has a rental value of $500 a month which he pays, but he can vacate the building without giving notice. His other expenses are $100 a month for maintenance. He makes $25,000 a year on net sales (total revenue minus the wholesale cost of the product). If he quit his job and worked the same number of hours elsewhere at a job he liked equally well, he estimates that he could make $20,000 a year. No one else can be hired to work in the store. Suppose that the store owner gave Joe the store. Now what should he do?
A. Work part-time. B. Keep the job. C. Quit his job. D. It is impossible to say with the information given in the problem.
The theory of resource pricing is sometimes referred to by economists as the theory of income distribution. Why?
What will be an ideal response?
The official poverty rate for the United States for a family of four is approximately:
a. $12,000. b. $16,000. c. $20,000. d. $24,000.