An open economy is one that
A) has a large government sector.
B) lends and borrows in the international capital market.
C) produces mainly agricultural goods.
D) produces mainly manufactured goods.
B
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An inferior good is one
A. produced by American industries. B. whose quantity demanded falls when the purchaser’s income rises. C. ordinarily bought by college students from college-town merchants. D. suitable for a garage sale.
The total amount that the U.S. government spends to support a covered type of health care service under the Medicare system equals
A) the per-unit subsidy provided to producers of that service times the quantity of the service demanded by consumers at a below-equilibrium out-of-pocket price of the service. B) the per-unit subsidy provided to producers of that service times the equilibrium quantity of the service demanded at the market clearing price that would arise in the absence of Medicare. C) the below-equilibrium, out-of-pocket price that consumers pay for the service times the quantity of the service provided by producers at that out-of-pocket price. D) the below-equilibrium, out-of-pocket price that consumers pay for the service times the quantity of the service demanded by consumers at that out-of-pocket price.
The production possibilities frontier illustrates
A. the fundamental fact of scarcity. B. the opportunity cost of acquiring more of one good. C. maximum output utilizing all resources efficiently. D. All of the responses are correct.
If you borrow money at a nominal interest rate of 5 percent and the inflation rate is 10 percent, what real interest rate will you pay?
a. -5 percent b. 0.5 percent c. 2 percent d. 5 percent e. 10 percent