Why do opportunity costs increase as society produces more of a good?
What will be an ideal response?
As society produces more of a good, ever-increasing quantities of other goods and services must be sacrificed or given up. This occurs mostly because there is difficulty experienced in moving resources from one industry to another. The mix of factor inputs also has an impact and may restrict output capabilities.
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Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The GDP Price Index remains the same and reserve-related (central bank) transactions become more positive (or less negative). b. The GDP Price Index falls and reserve-related (central bank) transactions remain the same. c. The GDP Price Index and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Suppose people anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest rate is 4 percent, what will be the nominal (money) interest rate?
What will be an ideal response?
Throughout the twentieth century, and especially since the mid-1960s:
A. the labor force participation rates of women increased dramatically. B. the labor force participation rates of women have decreased dramatically. C. the labor force participation rates of women slowly increased. D. the labor force participation rates of women fluctuated wildly.
Which of the following is the best example of an artificially scarce good?
a. premium cable channels b. lobster c. college classes d. gasoline