Recall the Application about running a software programming business to answer the following question(s).If by starting your own software development business you are forced give up your job as a janitor, then the income you could have earned as a janitor is:
A. part of the opportunity cost of operating your software business.
B. not part of the opportunity cost of operating your software business.
C. part of the benefit of operating your software business.
D. is an example of the principle of diminishing returns.
Answer: A
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Moving along the production possibilities frontier itself illustrates
A) the existence of tradeoffs. B) the existence of unemployment of some factors of production. C) the benefits of free lunches. D) how free lunches can be exploited through trade. E) how tradeoffs need not occur if the economy is efficient.
If the federal government's expenditures are less than its tax revenues, then
A) the budget is balanced. B) a budget surplus results. C) a budget deficit results. D) No conclusion can be drawn here regarding the budget surplus or deficit without information regarding government purchases versus other outlays.
Which kind of risk affects the opportunity cost of capital?
A) Nondiversifiable risk B) Diversifiable risk C) Both nondiversifiable and diversifiable risk D) The risk inherent in "riskless" assets such as U.S. Treasury bills E) The risk inherent in "riskless" portfolios such as broad stock market holdings
Why wasn't the stimulus passed in 2009 effective in reducing unemployment during the recession of 2009-10?
A) Congress cut the size of the final package, it was skewed toward tax cuts, and it was only 25% of the amount needed to restore GDP to full employment. B) The administration mismanaged it—and it was much too large. C) Fiscal policy is ineffective in a liquidity trap. D) Tax cuts and interest rate cuts would have been effective, but they were politically undesirable.