Based on the graph showing rational expectations and the AD/AS model, expansionary policies will cause ______.
a. a move to a lower point on the aggregate demand curve
b. a move to a higher point on the aggregate demand curve
c. the aggregate demand curve to shift to the left
d. the aggregate demand curve to shift to the right
d. the aggregate demand curve to shift to the right
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Refer to Figure 10-9. The change in the budget constraint from BC1 to BC2 implies
A) income and the prices of DVDs and CDs have increased. B) the price of DVDs has increased and the price of CDs has decreased. C) the prices of DVDs and CDs have increased. D) the price of DVDs has decreased and the price of CDs has increased.
In reality, according to the model developed in Section 15.5 of the textbook, prices of non-renewable resources have not increased continually because of
A) abundance of the resource. B) technological progress changing marginal cost. C) changing market power of producers. D) All of the above.
When would sunk costs be irrelevant for current decision making?
a. when the sunk costs are computed using accounting methods b. when the sunk costs are greater than variable costs c. when the sunk costs have been incurred only a short time ago d. Sunk cost are always irrelevant when making current decisions.
When the price of a good changes, the amount of that good that buyers wish to buy changes:
A. because of both the substitution and the income effects. B. only if the substitution effect and the income effect do not cancel out each other. C. solely because of the income effect. D. solely because of the substitution effect.