The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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When the exchange rate between the U.S. dollar and the euro changes from 1.07 euros per dollar to 0.93 euros per dollar, then the
A) U.S. dollar has depreciated against the dollar. B) U.S. dollar has depreciated against the euro. C) euro has depreciated against the dollar. D) U.S. dollar has appreciated against the euro. E) euro has depreciated against the euro.
To the casual observer it is often difficult to understand how a company would spend several million dollars building a plant or other structure and then simply stop and abandon the project midway. How can this be justified on economic grounds?
What will be an ideal response?
Refer to Scenario 18.1. If the fishermen are given the right to clean water,
A) the outcome will be more efficient than if the factory is given the right to use the water as it sees fit. B) the outcome will be less efficient than if the factory is given the right to use the water as it sees fit. C) the efficient outcome will occur no matter who is given which property right, and the individual gains will be the same in each case. D) the factory will be forced to shut down. E) the efficient outcome will occur no matter who is given which property right, but how that maximum gain is split will be determined during bargaining.
Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the:
A. same expenditure on all goods. B. greatest marginal utility. C. lowest expenditure. D. greatest total utility.