When examining the financial status of households, wealth is
A) synonymous with income.
B) a flow variable whereas income is a stock variable.
C) a stock variable and includes both tangible assets and human capital.
D) not as important as income because wealth does not change over time.
Answer: C
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Use the following graph of demand curves to answer the next question.
Which demand curve is relatively most elastic between P1 and P2?
A. D1 B. D2 C. D3 D. D4
Where can an economy not produce?
a. inside its production possibilities frontier b. on its production possibilities frontier c. outside its production possibilities frontier d. at the endpoints of its production possibilities frontier
Why did the U.S. temporarily operate outside the production possibilities frontier in 1942, 1943, and 1944?
A. The Civil War B. World War I C. The Great Depression D. World War II
The budget line will shift parallel to the right if:
A. income increases. B. income decreases. C. the price of the good on the vertical axis increases. D. the price of the good on the vertical axis decreases.