Legislators argue that a minimum wage law is instituted to help poor people. Economists can attack the minimum wage law on two fronts. First, some argue that government should not help the poor. Second, some argue that minimum wage laws actually hurt the poor because it creates unemployment. Which argument is normative and which is positive?
What will be an ideal response?
An opinion about the role of government is a normative statement. An observation about the impact of a law is a positive statement.
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The table above gives information about the economy of France. The growth rate of real GDP per person in 1998 is ________ percent
A) 0.4 B) 3.1 C) 1.9 D) 3.6 E) 4.0
Suppose your tastes are defined by the utility function 
.
a. Suppose your income is $1,000, the price of 
is 1 and the price of 
style="vertical-align: -7px;" width="15px" height="20px" align="absmiddle" /> is 
. Set up your utility maximization problem.
b. Derive the quantity of 
you will consume.
c. What happens to your consumption of 
if 
increases?
d. Now suppose that your and my tastes are captured by the utility function 
, with the parameter 
different for you than it is for me. When 
increases, you consume more 
than before and I consume less. What range of 
is consistent with your behavior, and what range is consistent with mine? Use your answer to (b) to explain.
What will be an ideal response?
If the Fed decides to use an open market operation to reduce the money supply by $1 million, and if the money multiplier is 10, then what total amount of Treasury securities must the Fed initially sell?
A. $10,000,000. B. $1,000,000. C. $100,000. D. $10,000.
The price elasticity of demand for color printers is 1.6 and you would like to see the quantity demanded for color printers to increase by 32%. Then the percentage change in price should be:
A. 10%. B. 15%. C. 20%. D. 25%.