Katherine gives piano lessons for $20 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are
a. $100, and her economic profits are $100.
b. $100, and her economic profits are $0.
c. $0, and her economic profits are $100.
d. $0, and her economic profits are $-100.
b
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If the growth rate of nominal GDP and the rate of inflation in an economy are 4% and 1% respectively, the growth rate of real GDP in the economy must be:
A) 4%. B) 1%. C) 3%. D) 5%.
Ronald Coase is famous for the Coase Theorem, which is based on the premise that there is an economically efficient level of pollution reduction
Many economists believe that the tradable emissions allowance program that has been used to deal with the problem of acid rain has been successful in reducing emissions of sulfur dioxide in an economically efficient manner. Why isn't this program an example of the Coase Theorem?
Suppose that inflation is at the target rate and output has fallen substantially below potential output. A central bank with a primary objective of price stability should ________
A) do nothing, because inflation cannot rise when unemployment is high B) ease monetary policy, to avoid a decrease in the inflation rate C) do nothing, because stabilizing economic activity is not a primary objective D) ease monetary policy, because avoiding high unemployment is more important than avoiding high inflation E) none of the above
If foreigners are restricted in their ability to buy investments in a country then that government is imposing:
A. controls on capital inflows. B. fixed exchange rates. C. controls on capital outflows. D. controls on both capital inflows and outflows.