Suppose that businesses and consumers become much more optimistic about the future of the economy. To stabilize output, the Federal Reserve could
a. buy bonds to raise interest rates.
b. buy bonds to lower interest rates.
c. sell bonds to raise interest rates.
d. sell bonds to lower interest rates.
c
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If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,
A. Juan is better off getting up at 8 a.m. B. Juan is better off getting up at 9 a.m. C. Juan’s total utility from sleeping must be negative. D. Juan’s average utility from every hour he sleeps must be negative.
Economists have shown that the burden of a tax is
A) greater on the buyer when the tax is collected from the seller and greater on the seller when the tax is collected from the buyer. B) the same whether the tax is collected from the buyer or the seller. C) greater on the buyer when the tax is collected from the buyer. D) greater on the seller when the tax is collected from the seller.
A favorable balance of trade occurs when:
a. goods exports are greater than goods imports. b. goods imports are greater than goods exports. c. international trade is an increasing share of total output. d. the balance on capital account equals the balance on current account. e. unilateral transfers are positive.
Suppose that Linda's parents offer her a choice of presents for her graduation: $500 today to buy herself a bike, or $500 two years from now. If Linda has a positive rate of time preference, which would she prefer, and why?
a. $500 today is preferred to $500 two years from now because Linda values present consumption more than future consumption. b. $500 two years from now is preferred to $500 today because Linda knows her parents will give her more than $500 after two years. c. $500 two years from now is preferred to $500 today because Linda values future consumption more than present consumption. d. $500 today is preferred to $500 two years from now because Linda plans to invest the money and earn higher returns after two years.