Real business cycle proponents argue that
a. recessions are caused by movements of output away from the natural rate of output.
b. prices and wages are sticky.
c. macroeconomics should be based on the same assumptions as microeconomics.
d. monetary policy is important in determining recessions.
e. none of the above.
C
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If the price elasticity of demand coefficient equals 2 then:
a. a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded. b. a price decrease will increase total revenue. c. the good has an inelastic demand. d. there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively small percentage of consumers' budgets.
A country can achieve some combination of goods outside its production possibilities curve by:
A. idling some of its resources. B. specializing and engaging in international trade. C. buying the debt (bonds and stocks) of foreign nations. D. producing more capital goods and fewer consumer goods.
Which of the following price indices comes closest to measuring the cost of living of the typical household?
A) GDP deflator B) producer price index C) consumer price index D) household price index
The main factor that explains the difference between accounting cost and economic cost is
A) opportunity cost. B) fixed cost. C) variable cost. D) All of the above help to explain the difference.