Which of the following is often referred to as the basic postulate of economics?
a. Individuals act only out of selfish motives.
b. Incentives matter--individuals respond in predictable ways to changes in personal costs and benefits.
c. The accuracy of the assumptions is the best test of an economic theory.
d. The value of a good is objective; it is equal to the cost of producing the good.
B
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Suppose the government imposes a small carbon tax on automakers. But the price of gasoline has doubled due to a Middle East crisis which has reduced oil production
In the market for autos, these changes mean that supply and demand have both changed with the effect on the demand larger than the effect on the supply. The result is that the price of autos will ________ and the number of autos sold will ________. A) rise; perhaps change but we can't say if it increases, decreases, or stays the same B) rise; increase C) rise; decrease D) fall; perhaps change but we can't say if it increases, decreases, or stays the same E) fall; decrease
According to the Prebisch-Singer thesis
(a) demand for primary products has steadily fallen. (b) profits of primary producers have steadily fallen. (c) primary producers' terms of trade have steadily fallen. (d) prices of primary products have risen over time.
In the long run, a country's exchange rate is determined by:
A. supply and demand. B. domestic monetary. C. purchasing power parity. D. the domestic inflation rate.
Due to automatic stabilizers, when income rises, government transfer spending:
A. and tax revenues increase. B. increases and tax revenues decrease. C. and tax revenues decrease. D. decreases and tax revenues increase.