Normative statements are:
a. prescriptive, making claims about how the world ought to be.
b. descriptive, making claims about how the world is
c. optimistic, putting the best possible interpretation on things.
d. statements that establish production goals for the economy.
a
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The theory of PPP suggests that if one country's price level falls relative to another's, its currency should
A) depreciate. B) appreciate. C) float. D) do none of the above.
Suppose Stephen's first novel makes the New York Times bestseller list. Regression to the mean implies that his second novel:
A. won't be as popular as his first novel. B. will be even more popular than his first novel. C. will have a similar plot to his first model. D. will be a complete flop.
GDP overstates the productive capacity of a country when:
A. economic bads like pollution are produced and then must be cleaned up. B. there is a sizable underground economy. C. nonmarket production represents a large portion of the economy. D. working conditions improve, allowing jobs to be completed safer and faster.
Asymmetric information exists in the market for used cars because:
A. sellers have better information concerning the quality of used cars than buyers. B. buyers have better information concerning the quality of used cars than sellers. C. buyers and sellers have equal information concerning the quality of used cars. D. it is impossible for buyers or sellers to determine the quality of used cars.