If velocity remains constant, which of the following examples would cause deflation?
a. Money supply increases by 9 percent; real GDP increases by 4 percent.
b. Money supply increases by 6 percent; real GDP increases by 8 percent.
c. Money supply increases by 3 percent; real GDP increases by 2 percent.
d. Money supply increases by 8 percent; real GDP increases by 8 percent.
b. Money supply increases by 6 percent; real GDP increases by 8 percent.
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Opportunity cost can best be defined as
A) the interest cost of financing a business loan at the bank. B) the value of all of the alternatives sacrificed. C) the value of the next-highest-ranked alternative. D) There is no real definition for opportunity cost.
From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the:
A. opportunity costs of more insurance coverage are greater than the payment for more insurance coverage. B. marginal benefits of more insurance coverage are greater than the marginal costs. C. marginal benefits of more insurance coverage have decreased. D. marginal costs of more insurance coverage have increased.
A well-maintained house and yard is an example of
A. a positive externality. B. a public good. C. a negative externality. D. logrolling.
In deriving the demand schedule for a good, economists assume that
A) consumers have equal incomes to allocate among goods. B) a consumer will allocate all of her income to one good. C) all other influences on demand except the product price are held constant. D) reported income changes at each point on the demand schedule.