Suppose Jerry consumes three hamburgers at McDonald's one evening. He figured the last one was just worth the price he paid for it. If the hamburgers he buys have a price of $1, then
a. he earned no consumer surplus
b. he would have earned consumer surplus if he had eaten one more hamburger
c. he was irrational
d. he may have earned consumer surplus on the first two hamburgers
e. he earned $1 consumer surplus on the third hamburger alone
D
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A) frictional B) cyclical C) structural D) under-reported
The strike price of a put option for a particular stock is $48. If the stock is selling for $45 on the expiration date, a put option on this stock has an intrinsic value of __________ per share
A) $48 B) $45 C) $3 D) $0
Explain why rational expectations theorists do not support government intervention to alleviate unemployment. Explain their views on the effectiveness of fiscal policy and monetary policy
The actual multiplier effect in the U.S. economy is less than the multiplier effect in the text examples because:
A. the real-world MPS is larger than the MPS in the examples. B. in addition to saving, households use some of any increase in income to buy imported goods and to pay additional taxes. C. the gap between the nominal interest rate and the real interest rate widens as the economy expands or contracts. D. the MPC in the United States is greater than 1.