Restaurants will add high-price food items to the menu to lure diners to choose foods just below the high-price items. These items generally have the highest profit margin. This is an example of:
A. choice architecture.
B. enlightened self-interest.
C. price discrimination.
D. irrational behavior.
Answer: A
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Suppose the economy is operating below potential output. If policy makers try to avoid a budget deficit by raising taxes or reducing government spending, these actions would
A) make a recession worse. B) increase inflation. C) negate the multiplier effect. D) help pull an economy out of a depression.
Can nominal GDP increase even when real GDP decreases?
A) No, it is not possible. B) Yes, but only if the price level decreases. C) Yes, but only if the price level increases. D) Yes, but only if the price level remains unchanged.
If the public is not sure about the central bank's motives, then
A) initial releases of data may be less accurate than later data releases. B) the predominant source of shocks to the economy must be shocks to the LM curve. C) central bankers should try to stabilize the inflation rate. D) modern macroeconomic modeling techniques will fail.
A demand schedule relates prices of a particular good to quantities demanded
a. True b. False Indicate whether the statement is true or false