An "omitted variable" is
A) a variable which is purposely omitted from an economic analysis.
B) a variable which is inadvertently omitted from an economic analysis.
C) a variable that has no impact on other variables in an economic analysis.
D) a variable that affects other variables and its omission from economic analysis can lead to false conclusions about cause and effect.
Answer: D
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An increase in wages raises the opportunity cost of leisure and leads to an increase in the quantity of labor supplied
Indicate whether the statement is true or false
Which of the following is NOT an assumption regarding people's preferences in the theory of consumer behavior?
A) Preferences are complete. B) Preferences are transitive. C) Consumers prefer more of a good to less. D) All of the above are basic assumptions about consumer preferences.
Which of the following is true?
a. Changes in personal costs and benefits will exert a predictable impact on the choices of human decision makers. b. Only direct monetary costs matter in making decisions. c. If a good is provided free to an individual, its production will not consume valuable scarce resources. d. Secondary effects are seldom of importance in economics.
Open market operations are
A. the buying of existing corporate securities in secondary markets by private citizens, banks and the Fed. B. the selling of new government securities in order to increase the money supply. C. the buying and selling of existing U.S. government securities in open private markets by the Fed. D. the actions of the Fed that are used to finance deficit financing by the government.