Which of the following is a question answered with normative economic reasoning?
A. If the college offers free parking for students, will more students drive to campus?
B. Should the college cut tuition to stimulate enrollment?
C. If the college provided more financial aid assistance, would more students benefit?
D. If the college increased tuition, would class size decline?
Answer: B
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A central bank can control the real interest rate precisely, so long as ________ remains constant
A) the nominal interest rate B) monetary policy C) expected inflation D) all of the above E) none of the above
Why is wage and price flexibility an important assumption of the classical model?
A) Flexible wages and prices guarantee that there will be no scarcity. B) Flexible wages and prices allow business firms to fool their workers through the money illusion. C) Flexible wages and prices allow business firms to fool their customers through the money illusion. D) Flexible wages and prices allow markets to reach equilibrium.
In a closed economy, the formula for public saving is: Sprivate = T + G + TR
a. True b. False Indicate whether the statement is true or false
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases. B. initially increases, then decreases. C. decreases. D. remains constant.