The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs) is based on the:
A. cost-benefit principle.
B. principle of comparative advantage.
C. principle of diminishing returns to capital.
D. scarcity principle.
Answer: A
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Refer to Figure 12-12. Consider a typical firm in a perfectly competitive industry that makes short-run profits. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?
A) Panel A B) Panel B C) Panel C D) Panel D
Economists Eichengreen and Hausmann coined the phrase original sin to describe developing countries inability to borrow in their own currencies. Where do they believe that this inability comes from? What are other beliefs on this topic?
What will be an ideal response?
Since 2004, the Fed has focused on a core price index that excludes food and energy prices to measure inflation because
A) food and energy are necessities, so consumers have no choice but to purchase these. B) food and energy prices tend to remain stable in the short run, so are not relevant to the calculation of inflation. C) including food and energy prices tends to overstate the true inflation rate by 0.5% to 1%. D) food and energy prices tend to fluctuate up and down for reasons that may not be related to the general causes of inflation.
If GNP is $200 billion and depreciation is $20 billion, then net national product is
A. $100 billion. B. $180 billion. C. $210 billion. D. $220 billion.