Explain the idea of a tradeoff and think of three tradeoffs that you have made today
What will be an ideal response?
A tradeoff reflects the point that when someone gets one thing, something else must be given up. What is given up is the opportunity cost of whatever is obtained. Three examples of tradeoffs that are common to students include: a) When a student sleeps in rather than going to his or her early morning economics class, the student trades off additional sleep for study time. The opportunity cost of the decision is a lower grade on the exam. b) When a student running late for class parks his or her car illegally, the student trades off saving time for the risk of a ticket. The potential opportunity cost of the decision is the goods and services that cannot be purchased if the student receives an expensive parking ticket. c) A student trades off higher income by spending time during the day working at a part-time job for less time spent at leisure time and study. The opportunity cost for the higher income is less leisure and lower grades in classes.
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The reason the short-run macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
a. the short-run macro model is flawed and inaccurate b. the classical model is flawed and inaccurate c. the two models measure completely different aspects of the economy d. in the short run, spending affects output, but not in the long run e. in the short run the role of government in helping the economy return to equilibrium is not considered
Figure 17-9
Refer to . Before the tariff is imposed, this country
a.
imports 200 carnations.
b.
imports 400 carnations.
c.
exports 200 carnations.
d.
exports 400 carnations.
The amendment to the U.S. Constitution that granted the federal government the authority to collect income taxes was the
A. 8th. B. 26th. C. 28th. D. 16th.
Aggregate demand decreases and real output falls but the price level remains the same. Which of the following factors most likely contributes to downward price inflexibility in the immediate short run?
A. The multiplier effect B. The wealth effect C. Fear of price wars D. Business taxes