The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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Lily wants to invest in the stock market. She notices that the share price for Widgets Inc. has been falling for weeks. She chooses to invest in Widgets Inc. because she assumes it is due for a rebound. Lily suffers from:
A. the hot-hand fallacy. B. the gambler's fallacy. C. irrational exuberance. D. the sunk cost fallacy.
In terms of production possibilities curves, the benefits of trade between two nations are that each nation moves to a higher:
a. standard of living. b. consumption possibilities combination. c. both a and b. d. neither a nor b.
Tariffs result in a decrease in consumer surplus because: a. the price and the quantity consumed of the protected good increases
b. the price and the quantity consumed of the protected good decreases. c. the price of the protected good increases and quantity consumed decreases. d. the price of the protected good decreases and quantity consumed increases.
In the long run, in a price-taker market, the price of a good is determined primarily by the
a. average total cost of producing it. b. decision of buyers in determining how much they are willing to pay for the good. c. elasticity of supply. d. number of firms in the industry.