When answering this question, assume individuals consider only the short-run effects of changes in future variables when forming expectations of future output and future interest rates. Suppose policy makers announce a reduction in future government spending. Which of the following will occur as a result of this expected reduction in government spending?
A) a reduction in the expected future interest rate and no change in expected future output
B) a reduction in the expected future interest rate and an increase in expected future output
C) a reduction in the expected future interest rate and an ambiguous effect on expected future output
D) none of the above
D
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There was a recent report that burglaries occur much more frequently in homes that are not as well kept as homes that have attractive landscaping and a more lavish appearance. This may seem odd because the value of the contents of the better homes would be worth far more to thieves. If a robber knows that the owners of one of each type of house is gone for the weekend, why would a rational robber break into the less lavish home?
What will be an ideal response?
If no foreign companies produce in a country, but many of the country's companies build products in foreign countries, then it is safe to say that _____.
(A) The country's GDP and GNP are equal. (B) The country's GDP is greater than its GNP. (C) The country's GDP is equal to its national income. (D) The country's GNP is greater than its GDP.
According to the table below, what is the average total cost of producing 160 units of output?QFCVC01,0000201,000350501,000700901,0001,0501251,0001,4001451,0001,7501601,0002,100
A. 22.04 B. 16.31 C. 19.38 D. 12.98
The optimal point on a production possibilities curve is achieved where:
A. the smallest physical amounts of inputs are used to produce each good. B. each good is produced at a level where marginal benefits equal marginal costs. C. large amounts of capital goods are produced relative to consumer goods. D. large amounts of consumer goods are produced relative to capital goods.