A true cost-of-living adjustment (COLA) in response to a change in prices would compensate consumers so that they would be able to
A) purchase the same bundle they purchased before prices changed.
B) achieve the same level of utility they did before prices changed.
C) face the same choices they did before prices changed.
D) achieve an increase in utility that is equal to the rate of inflation.
B
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The production possibilities frontier for a country is usually drawn
A. as a straight line, sloping downward. B. as a straight line, sloping upward. C. bowed outward from the origin. D. bowed inward toward the origin. E. as a dotted line when sloping downward and as a full line when sloping upward.
Joe likes peanut butter and jelly sandwiches for lunch. We can conclude that for Joe the cross elasticity of demand for peanut butter with respect to jelly is
A) positive because jelly and peanut butter are substitutes. B) positive because jelly and peanut butter are complements. C) negative because jelly and peanut butter are substitutes. D) negative because jelly and peanut butter are complements.
The Shadow Open Market Committee, a group of economists with the Monetarist point of view, calls for a reduction in the money supply. They must be concerned about ________.
A. rising rates of inflation B. new technological breakthroughs that might increase the growth rate of real GDP C. falling levels of real GDP D. high levels of unemployment
Suppose the best investment you could make with $200,000 in cash is to purchase a government bond that pays 10 percent interest per year. If you decide to invest the money in your own business instead of buying the government bond, the opportunity cost
of this financial capital is A) $2,000 per year. B) $200,000 per year. C) $20,000 per year. D) zero, because you already had the $200,000.