Which of the following is correct about the economic decisions consumers, firms, and the government have to make?
A) Governments may face the problem of shortages but not scarcity in making economic decisions.
B) Only individuals face scarcity; firms and the government do not.
C) Firms and the government face scarcity, individuals only face shortages.
D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.
Answer: D
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Use the following market-for-money diagrams to answer the next question.
If the Federal Reserve increased the stock of money, the
A. S curve would shift leftward and the equilibrium interest rate would rise. B. D3 curve would shift leftward and the equilibrium interest rate would rise. C. S curve would shift rightward and the equilibrium interest rate would fall. D. D3 would shift leftward and the equilibrium interest rate would fall.
What is the crowding-out effect and how does it operate? What is its relationship to the Ricardo-Barro effect?
What will be an ideal response?
The optimal sharing group _____
a. increases as the cost of the public good increases b. declines as the cost of the public good increases c. declines as the cost of the public good declines d. increases as the cost of the public good increases
Which of the following represents a problem with using per capita GDP to compare standard of living between less-developed and industrially advanced countries? a. GDP per capita does not take into account differences in population between countries
b. GDP is particularly difficult to measure in industrially advanced countries because a much larger percentage of economic activity occurs outside of officially measured market activity than in less-developed countries. c. GDP per capita will overstate the prevailing standard of living for the average person in countries with extreme levels of income inequality. d. None of the above are correct.