You have a small business that makes $50,000 accounting and economic profit for you. As a disabled person, you must work at home and you did not have other opportunities until your neighbor offers you a job you like equally well for $50,000 and you can do it at home. This means
A. both your accounting and economic profit have gone up.
B. your economic profit has gone down and your accounting profit has stayed the same.
C. both your accounting and economic profit have gone down.
D. your economic profit has gone down and your accounting profit has gone up.
Answer: B
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The chain-weighted output index
A) uses only the current year's prices to calculate growth in real GDP. B) uses prices for the current year and the previous year to calculate growth in real GDP. C) must be calculated only every other year. D) is an inaccurate way to measure growth in real GDP and so has been replaced by the "nominal-to-real" index.
Which of the following most accurately describes the "Fisher effect?"
a. Interest rates increase after inflation and decrease after deflation, but with a long lag. b. Interest rates are independent of inflation and deflation. c. Interest rates increase after inflation, but are not affected by deflation. d. Increasing interest rates precede inflation and decreasing interest rates precede deflation.
To say that people make decisions at the margin means that:
a. wait until the last minute before making a decision.
b. weigh the additional costs and additional benefits of small changes.
c. make decisions that determine whether or not they will live their lives on the edge of subsistence.
d. make decisions on issues that are relatively unimportant for their economic well-being.
The shorter the period of time being considered, the less rapidly will diminishing marginal utility set in
a. True b. False Indicate whether the statement is true or false