If an economy produces 2,000 units of output with a price level of $2 and the money supply (M) is $1,000, velocity is:
A. 1.
B. 2.
C. 4.
D. 500.
Answer: C
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Based on the above figure showing a budget line, which of the following combinations of soda and bottled water are not affordable?
A) 3 bottles of water and 4 cans of soda B) 4 bottles of water and 2 cans of soda C) 2 bottles of water and 6 cans of soda D) None of the above, that is, all the combinations listed are affordable.
Suppose that Adam and Sam each invest $5,000 in the same stock this year. Adam invests directly and earns 5% a year. Sam uses a retirement fund that charges an administrative fee and earns 4.75%. After 30 years, how much more money will Adam have than Sam?
a. $2,883.12 b. $2,526.78 c. $3,167.45 d. $3,044.62
Suppose a couple's decision about where to live was based on maximizing family income. The wife is offered a job elsewhere paying $35,000 more per year, but the husband would have to take a $60,000 pay cut to move with her so they stay. The fact that the wife's salary is lower than average in her field is a result of
a. compensating differentials. b. supply decisions by the workers. c. gender discrimination. d. differences in human capital.
The potential for a decline in product quality due to asymmetric information is commonly referred to as
A. the externality problem. B. planned obsolescence. C. diminishing marginal product. D. the lemons problem.