The production possibility model can be used to demonstrate the concept of opportunity cost.
Answer the following statement true (T) or false (F)
True
The production possibility model shows all the possible production combinations and also demonstrates the trade-offs involved in moving from one combination to another.
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Tennis balls and tennis rackets are complements. If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded, the cross elasticity of demand equals
A) 3. B) -3. C) 1/3. D) -1/3. E) 9.
If the banking system's money multiplier is 4, then a $2,000 increase in checkable deposits when banks hold excess reserves will result in which of the following events?
a. The money supply will decrease b. The money supply will not change. c. The money supply will increase by exactly $8,000. d. The money supply will increase by more than $8,000. e. The money supply will increase by less than $8,000.
The proposition that policy actions have no real effects in the short run if the policy actions are anticipated is known as
A. the unemployment stabilization proposition. B. the policy illusion proposition. C. the Keynesian proposition. D. the policy irrelevance proposition.
The marginal rate of substitution is the
A) rate at which the consumer can exchange one good for the other. B) change in the quantity of one good that just offsets a one-unit change in the consumption of another good such that the total satisfaction remains constant. C) change in the quantity of one good that changes the utility received by one unit. D) same thing as the marginal utility of a good.