Normative economics ________ and positive economics ________.
A. does not involve judgments; involves judgments
B. involves judgments; does not involve judgments
C. involves judgments; also involves judgments
D. does not involve judgments; also does not involve judgments
Answer: B
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Answer the following statements true (T) or false (F)
1. A free good may eventually become an economic good. 2. Payment for the use of capital is made in the form of rent. 3. The study of economics would be less complicated if differences in subjective judgments did not exist. 4. Equilibrium is a position of stability or rest.
What action should the Fed take if it wants to move from a point on the short-run Phillips curve representing low unemployment and high inflation to a point representing higher unemployment and lower inflation?
What will be an ideal response?
Keynes believed that
A) Say's law would hold in a laissez-faire economy. B) the economy would always be near or on its production possibilities frontier. C) wages and prices are often inflexible in the downward direction. D) the equilibrium level of output will always be at the full-employment level of output.
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Refer to Scenario 13-4. Abdul’s explicit cost of capital is
a. $8,000. b. $4,000. c. $2,000. d. $1,000.