You are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?
A. Less than 18%
B. Above 18%
C. 18%
D. The rate on government bonds
Answer: B
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While some countries might be better off (in terms of social surplus) from the imposition of a tariff, the world overall is always worse off (in terms of social surplus) when import tariffs are imposed.
Answer the following statement true (T) or false (F)
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
A) GDP will not change. B) GDP will increase. C) GDP will decrease. D) GDP may increase or may decrease depending on inflation.
All of the following are possible outcomes of a banking crisis EXCEPT
A) depositors, but not banks, may lose all or a portion of their assets. B) a recession due to decreases in consumption by households. C) decreases in lending practices by banks. D) decreases in investment. E) a contagion effect of the crisis from vulnerable banks to financial institutions on sound basis.
The difference between traditional theories of the business cycle and real business cycle theory is the
a. emphasis they place on the government's role in the economy b. ideas they hold about the importance of investment in influencing the economy's growth path c. ideas they hold about the importance of technology in influencing the economy's growth path d. emphasis they place on the timing of the cycle e. way they define GDP and full employment, which means they describe the same events quite differently