Refer to the diagram in which the downsloping lines are budget lines and I 1 , I 2 , and I 3 comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that:
A. point 2 yields more utility than either 1 or 5.
B. points 1 and 5 yield more utility than point 2.
C. points 1, 2, and 5 yield equal amounts of utility.
D. the levels of utility associated with these three points cannot be compared.
C. points 1, 2, and 5 yield equal amounts of utility.
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If cyclical unemployment is eliminated in the economy, then
A) the unemployment rate is above the natural rate of unemployment. B) the economy is considered to be at full employment. C) the unemployment rate is below the natural rate of unemployment. D) the economy is at less than full employment.
An increase in the money supply would
A) shift the LM curve to the left. B) shift the IS curve to the right. C) shift the IS curve to the left. D) shift the LM curve to the right.
The opportunity cost of an economic decision is:
a. the best alternative that was sacrificed. b. the amount of money needed to implement the decision. c. any land, labor, and capital that are wasted. d. all options that were lost due to scarcity.
The existence of discouraged workers will lead to an official unemployment rate that is:
A. overstated. B. understated. C. either overstated or understated. D. unbiased.