Given an upward sloping aggregate supply curve, which of the following changes in the aggregate demand curve is observed when the Fed reduces the money supply?
What will be an ideal response?
The aggregate demand curve shifts leftward, lowering real GDP and the price level.
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Scott and Tom have dinner together at a new restaurant, and they discover that the portions are huge but taking home leftovers is not allowed. When both decide they are full, Scott forces himself to finish the rest of the food on his plate even though he doesn't really want to, while Tom asks the waiter to remove his plate while it still contains some food. How would an economist describe this behavior?
A. Scott acted rationally, because the food otherwise would have been thrown away. B. Tom acted rationally, maximizing his utility. C. Both Tom and Scott acted rationally. D. Both Tom and Scott acted irrationally.
In a perfectly competitive industry, assume the short-run average total cost increases as the output of the industry expands. In the long run, the industry supply curve will:
A. have a positive slope. B. have a negative slope. C. be perfectly horizontal. D. be perfectly vertical.
If you observe that Kelly Clarkson won American Idol 3 years before Carrie Underwood won, and you conclude that Kelly Clarkson winning caused Carrie Underwood to win 3 years later, you would be guilty of an error called the
A. post hoc, ergo propter hoc fallacy. B. fallacy of logic. C. fallacy of inductive reasoning. D. fallacy of ceteris paribus.
Consider the following linear transformation of a random variable y = where ?x is the mean of x and ?x is the standard deviation. Then the expected value and the standard deviation of Y are given as
A) 0 and 1 B) 1 and 1 C) Cannot be computed because Y is not a linear function of X D) and ?x