Economics is the study of
A) how to own as many resources as possible.
B) ceteris paribus.
C) the way people think rather than the way they act.
D) how people allocate their limited resources to satisfy their unlimited wants.
Answer: D
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Identify the correct definition of liquidity
a. The availability of credit in the form of money is known as liquidity. b. The ability of money to be a store of value is known as liquidity. c. The difference between real and nominal money values is known as liquidity. d. The ability of an asset to be easily converted into money is known as liquidity. e. The ability of an asset to be universally accepted as a means of exchange is known as liquidity.
Incentive compensation schemes are more likely to be value enhancing if:
A. they can accurately account for the dysfunctional behavior of the principal. B. they can minimize the administrative cost borne by the agent. C. they are designed to limit the agent's gaming behavior. D. they are designed to minimize the principal's average cost.
The percent increase in the CPI from one year to the next is a measure of the
A) GDP deflator. B) unemployment rate. C) real interest rate. D) inflation rate.
Employing a fixed-weight index like the Consumer Price Index to adjust a person's salary in response to inflation will overcompensate this person because doing so will allow this person to
A) buy the same bundle of goods as he did before the inflation. B) achieve a higher level of utility than he did before the inflation. C) achieve the same level of utility as before the inflation. D) buy more of all goods.