Typically, the unemployment rate ________ during a recession and ________ during an expansion.
A. rises; falls
B. rises; does not change
C. rises; rises even more
D. falls; rises
Answer: A
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A reason why many of the third world countries are not achieving an increase in their standard of living is that they
A) don't have a strong central government. B) don't have strong military power to force people to work harder. C) don't have social institutions with a strong rule of law and economic freedom. D) strongly encouraged international trade. E) don't have enough natural resources.
Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value. B) People measure the value of a good in terms of its purchase price. C) Sunk costs have a higher opportunity cost than costs that can be recovered. D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.
A rise in stock prices ________ the net worth of firms and so leads to ________ investment spending because of the reduction in moral hazard
A) raises; higher B) raises; lower C) reduces; higher D) reduces; lower
The leakage and injections approach implies that a government deficit is financed by
A) private saving less private investment plus net exports. B) private investment less private saving plus net exports. C) the trade deficit must always offset the government deficit. D) None of the above.