To say that people make decisions at the margin means that:
a. wait until the last minute before making a decision.
b. weigh the additional costs and additional benefits of small changes.
c. make decisions that determine whether or not they will live their lives on the edge of subsistence.
d. make decisions on issues that are relatively unimportant for their economic well-being.
b. weigh the additional costs and additional benefits of small changes.
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The strategy profile in which both players remain silent in the Prisoners' Dilemma can be described as:
a. non-Pareto optimal and unstable. b. Pareto optimal and unstable. c. non-Pareto optimal and stable. d. Pareto optimal and stable.
Politicians and economists who are generally conservative tend to believe that
a. the self-correcting mechanism is slow and unpredictable. b. the short-run Phillips curve is relatively steep. c. the costs of unemployment are high. d. expectations in reaction to policy measures are very slow to change.
When the Fed purchases government bonds the money supply _____ and the federal funds rate _____
Fill in the blank(s) with correct word
The difference in the prices of a good in two countries creates opportunities for arbitrage: traders buy the good at a low price in one country and sell it at a higher price in the other. When the difference in the prices vanishes, and the world price is established in both countries, there is no scope for trade anymore because no trader will be willing to buy the good in one country and sell it in another. Discuss the validity of this statement.
What will be an ideal response?