Economists focus on self-interest in explaining choices because:
A. it is a useful way to approach problems.
B. individuals often are motivated by selflessness.
C. economists know people are selfish even if psychologists don't.
D. economists do not believe that there is more to making choices than maximizing utility.
Answer: A
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Suppose your bank raises its minimum-balance requirement for free checking on checking accounts by $500. You take $500 out of your passbook savings account and put it in your checking account. What is the overall effect on M1 and M2?
A) M1 rises by $500, M2 falls by $500. B) M1 is unchanged, M2 is unchanged. C) M1 rises by $500, M2 is unchanged. D) M1 is unchanged, M2 falls by $500.
During the winter of 1997-1998, the northeastern United States experienced warmer than usual conditions. The price of home heating oil was less than it was during the previous winter, but people bought less home heating oil
This contradicts the Law of Demand. Indicate whether the statement is true or false
Refer to the following graph. An increase in aggregate demand when the economy is already at full employment is reflected as a rightward shift of the aggregate demand curve from
a. AD1 to AD2.
b. AD2 to AD3.
c. AD3 to AD4.
d. AD4 to AD5.
Under the Bretton Woods system, a country with a balance of payments deficit
a. could get loans from the U.S. government. b. could devalue if deflationary policies failed to eliminate the deficit. c. was not allowed to devalue under any circumstance. d. was required to devalue its currency immediately.