Even though mass transit systems such as buses are available in most cities in the United States, many residents decide to drive to work in their own vehicles because
A) the opportunity cost of riding a bus is too high for them.
B) there is no opportunity cost of them to drive.
C) they are not rational.
D) they do not behave according to the economic way of thinking.
Answer: A
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If short-run equilibrium output equals 50,000 and potential output (Y*) equals 45,000, then this economy has a(n) ________ gap that can be closed by ________.
A. expansionary; decreasing government purchases B. expansionary; increasing transfer payments C. expansionary; decreasing taxes D. recessionary; increasing government purchases
Suppose workers agreed to a contract that guaranteed a real wage increase of 3 percent per year. If the inflation rate was 7 percent over the following year, what is the required increase in the nominal wage to meet the contract requirements?
a. 10 percent b. 3 percent c. 4 percent d. 7 percent e. 1 percent
Neoclassical economists believe that the government fosters economic growth by providing a stable economic environment with a low rate of ____________ and tax rates that are low and unchanging.
a. importing b. growth c. unemployment d. inflation
Corrective taxes are unlike most other taxes because they
a. distort incentives. b. move the allocation of resources away from the social optimum. c. raise revenue for the government. d. move the allocation of resources closer to the social optimum.