Some people choose to live close to the city center; others choose to live away from the city and take a longer commute to work every day. Does picking a location with a longer commute imply a failure to optimize?
What will be an ideal response?
People will choose where to live depending on the costs and benefits of each available alternative. For those who choose to live in an apartment away from the central business district, the net benefit of that apartment must be higher than the net benefit from other apartments. Since costs include the opportunity cost of time and the cost of commuting, the direct and indirect costs vary for different people. This does not mean that they are not optimizing; they have different preferences and face different costs. As a result, they make different decisions.
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Refer to the table above. If exports increase by $4,000 in the next year, ________, all other variables remaining unchanged
A) trade surplus will increase by $2,000 B) trade deficit will increase by $2,000 C) gross domestic product will increase by $4,000 D) gross domestic product will decrease by $4,000
The long-run aggregate supply curve can be thought of as the
A) level of output that the nation is currently producing. B) full-employment level of real GDP. C) level of real GDP associated with a constant price level. D) level of output for which real GDP equals nominal GDP.
Hometown, USA, has a labor force of 78,567 persons and employment of 74,382 . The unemployment rate for the city is: a. 5.3 percent
b. 5.6 percent. c. 6.0 percent. d. none of the above.
In a fractional-reserve banking system, a decrease in reserve requirements
a. increases both the money multiplier and the money supply. b. decreases both the money multiplier and the money supply. c. increases the money multiplier, but decreases the money supply. d. decreases the money multiplier, but increases the money supply.