Imagine a hypothetical world in which, over the last fifty years, both real GDP and prices have trended downward in most countries. Continuing falls in the level of real GDP and the price level can be explained by
a) neither technological ability nor changes in the money supply can explain continuing falls in the level of real GDP contraction and the price level.
b) continuing losses in technological ability alone.
c) continuing losses in technological ability and continuing decreases in the money supply.
d) continuing decreases in the money supply along.
Ans: c) continuing losses in technological ability and continuing decreases in the money supply.
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A true signal must
A) convey information only. B) convey information and direct the resource owners to act appropriately. C) convey information about the long-run future. D) explain in detail why something should be done.
A change in household preferences for saving that reduces the marginal propensity to save causes the consumption function to _____
a. become steeper b. become flatter c. shift upward d. shift downward
The optimal strategy for a risk-neutral bidder in a second-price, sealed-bid auction with independent private values is to bid:
A. slightly higher than his or her valuation. B. slightly less than his or her valuation. C. his or her true valuation. D. None of the statements is correct.
Justin and Maria work at a restaurant. Justin can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario, the opportunity cost of making one waffle for Maria is
A. 1/4 pancake. B. 4 pancakes. C. 2/5 pancake. D. 2 1/2 pancakes.