Which of the following issues will economists likely agree about?
A. The long-run achievable target rate of unemployment
B. Outside of some unemployment range, too much spending causes inflation and too little causes a recession
C. The relationship between the level of economic activity and inflation
D. Estimates of potential income
Answer: B
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When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter
A) 300 B) 200 C) 50 D) 0.75
Suppose that inflation is at the target rate and output has fallen substantially below potential output. A central bank with a primary objective of price stability should ________
A) do nothing, because inflation cannot rise when unemployment is high B) ease monetary policy, to avoid a decrease in the inflation rate C) do nothing, because stabilizing economic activity is not a primary objective D) ease monetary policy, because avoiding high unemployment is more important than avoiding high inflation E) none of the above
A profit-maximizing monopolist will continue expanding output as long as
a. marginal revenue exceeds marginal cost. b. marginal revenue is positive. c. the cost of producing an additional unit exceeds the marginal revenue derived from the unit. d. economic profit is more than zero.
Which of the following objectives is NOT a basis for international trade?
A. To gain from economies of scale. B. To obtain goods that would be unavailable otherwise. C. To obtain goods at lower prices than would be possible if they were produced domestically. D. To increase Treasury reserves of gold bullion.