Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you
ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics student, you rightly conclude that
A) Soo Jin did not have a choice; her roommate was a slob.
B) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $250.
C) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $950.
D) the cost of having one's own space outweighs the benefits.
Answer: B
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Monetary policy credibility has the benefit of ________
A) stabilizing inflation in the short run when faced with positive demand shocks B) stabilizing economic activity in the short run when faced with positive demand shocks C) transmitting the effect of aggregate demand shocks onto short-run aggregate supply D) enhancing the job opportunities of Federal Reserve officials after they leave the central bank
If a cartel is unable to monitor its members and punish those firms that violate their agreement, then
A) the member firms will each act as price setters. B) the cartel will prosper in the long run. C) the market will become a monopoly. D) the cartel will fail.
If the value of your savings is increasing over time, it must be true that the inflation rate:
A. is higher than the nominal interest rate. B. is lower than the nominal interest rate. C. and the nominal interest rate are the same. D. must be zero. AACSB: Analytical Thinking
Over the two-year period during which the financial crisis occurred, the amount of assets in the Federal Reserve balance sheet increased by:
A. 6 times. B. 3 times. C. 4.5 times. D. 2.5 times.