Scarcity
a. necessitates choice among consumer goods.
b. of income renders purchase decisions interdependent.
c. affects all consumer decisions.
d. may involve forgoing the pleasure of one good in order to enjoy another.
e. All of the above answers are correct.
e
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Comparative advantage means the ability to produce a good or service
A) at a higher profit level than any other producer. B) at a lower selling price than any other producer. C) of a higher quality than any other producer. D) at a lower opportunity cost than any other producer.
The higher is the tax on productive activity, the more likely that people will attempt to evade those taxes by diverting their economic activity from the formal, reported economy to an underground, "off-the-books" economy
Indicate whether the statement is true or false
To calculate GDP it is necessary to
A) add the total amounts of all the goods produced.
B) use production cost to place a dollar value on all goods produced.
C) average the cost of producing a good with the price of the good to place a dollar value on all goods produced.
D) use the market price to place a dollar value on each good produced.
E) use the average market price over the last five years to place a dollar value on all goods produced.
Answer the following statements true (T) or false (F)
1. Rational expectations theory suggests that people make consistent forecasting errors regarding the effects of policy. 2. Mainstream economists contend that monetary policy tends to be destabilizing, in contrast to monetarists who believe that monetary policy is a stabilizing factor. 3. An efficiency wage is an above-market wage that spurs greater work effort and gives the firm more profits because of lower wage costs per unit of output. 4. The "efficiency wage" is one possible explanation for rigidities in the economy that leads to economic instability. 5. Monetarists recommend that the supply of money should be increased at a constant rate each year, proportionate with the long-run growth of real output.