When the exchange rate falls, imports ________ and exports ________
A) increase; decrease
B) increase; increase
C) decrease; do not change
D) decrease; decrease
E) decrease; increase
E
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Describe the trends in U.S. manufacturing employment and U.S. manufacturing output over the last 40 years. What factors have contributed to these?
What will be an ideal response?
Consumers will always pay the entire amount of a specific tax whenever
A) demand is perfectly inelastic. B) supply is perfectly elastic. C) Both A and B above. D) Either A or B above but not at the same time.
When deciding on an appropriate course of action to counter a recessionary gap, which of the following do policy makers consider?
a. the slope of the short-run Phillips curve b. the costs of inflation and unemployment c. the efficiency of the economy's self-correcting mechanism d. All of the above are correct.
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. B) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits. C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions. D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions.