U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?
Since this is in real terms, it tells us that the U.S. is able to make a lot more stuff than in the past. Some of the increase in real GDP is probably due to an increase in population, so we could say more if we knew what had happened to real GDP per person. Supposing that there was also an increase in real GDP per person, we can say that the standard of living has risen. Material things are an important part of well-being. Having sufficient amounts of things such as food, shelter, and clothing are fundamental to well-being. Other things such as security, a safe environment, access to safe water, access to medical care, justice, and freedom also matter. However, many of these things are more easily obtained by being able to produce more using fewer resources. Countries with higher real GDP per person tend to have longer life spans, less discrimination towards women, less child labor, and a higher rate of literacy.
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How long is it worthwhile to continue searching for a $20 bill that you lost if you value your time at $5 an hour?
A) About 2 hours if there is a fifty percent chance of finding it. B) About 4 hours, regardless of the probability of finding it. C) Only so long as you expect to find it within the next four hours, which could mean far more than four hours of searching. D) You cannot make a rational decision without first knowing whether you will find it. E) You should not search at all because the lost bill is a sunk cost.
A price floor would be established in cases where the government believed the market equilibrium price would:
a. result in a surplus. b. be too high. c. result in a shortage. d. be too low. e. yield excess profits.
Which of the following is part of the economic way of thinking? a. When an option becomes less beneficial, individuals will become more likely to choose it. b. Costs are incurred whenever scarce resources are used to produce goods or services
c. The value of a good is determined by its cost of production. d. Both a. and b. are part of the economic way of thinking.
Assume a reserve requirement of 10 percent. A commercial bank has total reserves of $100,000, excess reserves of $25,000, and total checkable deposits outstanding of $750,000. If the reserve requirement were increased to 15 percent,
a. total expansion of the money supply would be limited to $750,000. b. excess reserves would be decreased to $12,500. c. the bank would have no alternative but to decrease its check able deposits. d. the bank would be $12,500 short of required reserves.