Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases
B. remains constant.
C. initially increases, then decreases.
D. decreases.
Answer: A
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If the expected real interest rate in an economy is 6% and the expected inflation rate is 4%, then the nominal interest rate in the economy is:
A) 6%. B) 14%. C) 4%. D) 10%.
According to this Application, the volatility of energy prices can contribute to uncertainty in the economy. An increasingly uncertain future will tend to cause firms to
A) delay their investment decisions. B) continue with a stable flow of investment spending so as not to get trapped by a downturning economy. C) wait for significant GDP growth before reducing investments. D) rely on the government to make their investment decisions for them.
A decrease in income will cause a consumer's budget constraint to
a. shift outward, parallel to its initial position. b. shift inward, parallel to its initial position. c. pivot along the horizontal axis. d. pivot along the vertical axis.
Answer the following statement(s) true (T) or false (F)
1. Governments should avoid investing in education because it has little impact on productivity or economic growth. 2. Rapid population growth can negatively impact per capita output. 3. The law of diminishing marginal returns means that population growth can result in workers with insufficient capital. 4. A larger population means a larger labor force, greater production, and higher standards of living for the average worker. 5. With a higher population growth rate comes greater capital stock per worker.