Money illusion is the
A. Movement of taxpayers into higher tax brackets as nominal income increases.
B. Focus on real dollars rather than nominal dollars to determine purchasing power over time.
C. Use of nominal dollars rather than real dollars to gauge changes in one's income or wealth.
D. Uncertainty that occurs because of inflation.
Answer: C
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If a firm shuts down in the short run, its losses are equal to
A. TC ? TR. B. TFC. C. TVC. D. MC.
In a market economy, which of the following is most important if one is going to achieve high earnings?
a. performing an important social function, like teaching. b. willingness to do hard physical work. c. having a membership in a labor union. d. providing goods and/or services that others value highly
The centerpiece of classical economics is _____.
Fill in the blank(s) with the appropriate word(s).
Suppose a small economy produces only MP3 players. In year 1, 10,000 MP3 players are produce and sold at a price of $100 each. In year 2, 12,000 MP3 players are produced and sold at a price of $80 each. Which of the following statements is true?
A. Real GDP and nominal GDP both increase B. Real GDP increases while nominal GDP remains constant C. Real GDP decreases while nominal GDP increases D. Real GDP increases while nominal GDP decreases