The fallacy of composition is the incorrect view that
a. decisions are always made at the margin.
b. incentives matter only to those who behave selfishly.
c. if something is true for an individual, then it must also be true for the group.
d. the value of a good can be objectively measured by its cost of production.
C
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Refer to Figure 11.1. Assume the economy is in equilibrium at 1 = 0. Other things equal, a negative demand shock such as the financial crisis of 2007-2009 would result in a movement from point ________ to point ________
A) A; B B) B; A C) A; C D) A; D
Marginal revenue product is defined as the
a. change in total output that results from the employment of an additional unit of a resource b. change in total product that results from the employment of an additional unit of a resource c. change in total revenue that results from the employment of an additional unit of a resource d. change in resource employment that results from a change in total output e. change in marginal revenue that results from a change in the employment of an additional unit of a resource
On a steeply sloped aggregate supply curve, monetary policy will affect primarily output
a. True b. False Indicate whether the statement is true or false
Which of the following would be an appropriate discretionary fiscal policy to use when the economy is in a recession?
A. increased government spending B. higher taxes C. a balanced-budget reduction in both spending and taxes D. an expansion in the money supply