Another term for the opportunity cost of capital is
A) the normal interest rate.
B) the normal rate of return.
C) a normal profit.
D) a normal wage rate.
B
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Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a
A) surplus, so the price falls and quantity supplied increases. B) surplus, so the price rises and quantity demanded increases. C) shortage, so the price rises and quantity demanded decreases. D) shortage, so the price falls and quantity demanded increases. E) surplus, so the price falls and quantity demanded increases.
Positive economic profits in a perfectly competitive market imply that:
A) producers are earning more than their opportunity cost. B) existing firms are likely to leave the market. C) the cost of production is equalized across producers. D) government intervention is required to stabilize the market.
Suppose an economy's exchange rate system is the gold standard and vast tracks of gold are discovered, as is what happened in the United States in 1849. If the economy is at full employment, what should this discovery do?
A) It should lower the money supply and cause deflation. B) It should raise the money supply and cause inflation. C) It should raise the money supply and cause disinflation. D) It should raise the money supply but have no impact on the price level. E) it should not change the money supply.
Which of the following shows a negative relationship between the output and unemployment gaps?
A) the AS curve B) the Phillips curve C) Okun's law D) the classical dichotomy E) none of the above