Input prices are fixed for a period of time and this causes firms to increase production as prices increase
a. True
b. False
Indicate whether the statement is true or false
True
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A retired athlete built a gym near his house that could be used for free by all the residents in the neighborhood. However, the overuse of the facilities soon led to irreparable damages. This is an example of the ________
A) tragedy of the commons B) pecuniary externality C) paradox of thrift D) prisoners' dilemma
Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:
a. $15 billion. b. $20 billion. c. $50 billion. d. $80 billion.
Which of the following is an example of the opportunity cost involved with social regulation?
a. The monetary costs of hiring administrative assistants to fill out OSHA safety reports b. The environmental costs of pollution control required under the Clean Air Act c. The monetary costs of laboratory trials required to try out a new drug d. The lives that are lost because new drugs are not introduced quickly e. The monetary cost of manufacturing a life saving drug
Which of the following is correct regarding why interest rates differ for different people or businesses, or for things like business loans, mortgage loans, student loans, and car loans?
a. Interest rates tend to be lower for those borrowers judged to be less likely to repay their loan. b. Interest rates tend to be higher for loans extended for shorter periods of time. c. The cost of administering one large loan will tend to be higher than the cost of administering the same amount of money extended to borrowers through many small loans. d. Interest rates tend to be lower for those borrowers judged to be more likely to repay their loan.