From 2001 to 2005 there was a dramatic change in the price of houses. This change made people feel wealthier and shifted aggregate demand curve to the right. The price of houses must have
a) fallen.
b) the price of houses has no effect on wealth and aggregate demand.
c) risen.
d) remained constant.
Ans: c) risen.
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Which of the following describes the reason why scarcity exists?
A. Governments make bad economic decisions. B. The gap between the rich and the poor is too wide. C. Wants exceed the resources available to satisfy them. D. There is too much unemployment.
Which of the following is a TRUE statement about the economic assumption of rationality?
A) Individuals who are rational necessarily ignore the interests of others. B) Individuals generally act as though they are rational. C) Individual behavior may be irrational but group behavior is always rational. D) People make decisions as if they are omniscient.
Suppose there are 3 possible outcomes to a vote: A, B, and C. If voters prefer A to B, B to C, and C to A, which of the following concepts are violated?
a. Transitivity b. Arrow's impossibility theorem c. Median voter theorem d. None of the above concepts are violated.
If point C is now 9 units of guns and 8 units of butter, the maximum units of guns possible to produce is 17 and the maximum units of butter possible to produce is 13, the production possibility curve would have shifted _____________ (outward/inward).
