The forgone income that the owner of a business could have made by spending time working in another job is called:
A. total cost.
B. explicit cost.
C. opportunity cost.
D. marginal cost.
Answer: C
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Everything else equal, an increase in the demand for labor will
a. increase the real wage rate, employment, and real output b. reduce the real wage rate, employment, and real output c. increase the real wage rate but decrease employment and real output d. reduce the real wage rate but increase employment and real output e. increase the real wage rate and employment, but leave real output unchanged
Professor Tabarrok suggests that the most important thing to understand about the AD curve is that:
A. changes in monetary or fiscal policy are incapable of shifting the AD curve. B. changes in inflation can rotate the AD curve. C. changes in spending growth can shift the AD curve. D. changes in real GDP growth cause movement along the AD curve.
In Figure 5.2, the fact that real GDP is greater than nominal GDP during the 1960-1980 periods implies that
A. Per capita GDP must have increased. B. Production must have decreased during this period. C. Average price levels must have decreased during this period. D. Average price levels during this period must have been lower than during the base period.
The economy’s self-correcting mechanism ensures that neither recessionary nor inflationary gaps will be eliminated eventually.
Answer the following statement true (T) or false (F)