When the interest rate is so low that the opportunity cost of holding money is zero, then economists say we have reached:
A) the era of total liquidity.
B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap.
C) full monetary saturation.
D) a situation in which a nation must use caution, since monetary policy is "super" effective.
Ans: B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap.
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The slope of a production possibilities curve represents:
A) the marginal cost of producing the good measured on the horizontal axis. B) the marginal cost of producing the good measured on the vertical axis. C) the opportunity cost of producing the goods. D) the ratio of the average cost of producing both goods.
Jim is haggling with a car dealer over the sale price of a used car. When he entered the store, the storekeeper was already haggling with the other customer. His bargaining position could get worse if
a. The customer leaves b. Another customer enters the store, interested in the car c. He gets an offer from another seller d. All of the above
Sally would only agree to a second date with Andy if she sees him leave a generous tip for the waiter on their first dinner date. This is an example of a
a. Screening mechanism b. Signaling mechanism c. Way to waste money d. None of the above
Union membership has fluctuated during the last several decades. Which of the following statements best describes the effect of unions on the share of total output allocated to labor?
a. The share of output going to labor has been virtually constant, even though union membership as a share of the labor force has fluctuated. b. The share of total output going to labor has followed the same pattern as the business cycle in recent years. c. The share of total output going to labor rose as union membership rose from 1945 to 1960 and fell as union membership declined during the 1960 through 2000 period. d. The share of total output going to labor has increased substantially, even though during the last several decades union membership has declined.