Gimmicks like the National Debt Clock
a. are misleading because they show the debt in nominal dollars rather than real dollars.
b. are misleading because they show the debt in dollars rather than as a percentage of GDP.
c. are misleading because they dot not show industrial production figures.
d. are needed to inform the American public about the massive amounts of debt the government is accumulating.
e. are misleading because they show the debt as a percentage of GDP rather than in dollars.
B
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What will be an ideal response?
Economists refer to externalities as an example of market failure when:
a. markets do not consider social costs as part of overall costs. b. additional external costs are so high that the firm must shut down. c. private costs are the same as costs to society as a whole. d. citizens bring lawsuits to stop production that pollutes.
If Real GDP is less than Natural Real GDP, the economy is in
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Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the greater potential for injury it creates by not wearing one in the unlikely event he is in an accident. To an economist, Jim is
a. making an irrational choice. b. making a rational choice. c. not fully considering the personal costs and benefits of his decision. d. not responding to the incentives he faces.