Which of the following is a good example of efficient specialization and voluntary exchange?
a. A college professor hires someone to rototill a garden for spring planting.
b. A college professor works on the engine of a car for a neighbor who is a mechanic.
c. A lawyer decides to babysit his young child and agrees to do so for others for cash.
d. A physician agrees to help a neighbor work on her income tax return in exchange for her bookkeeping services.
a
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To close a recessionary gap, the Fed would
A) decrease the money supply. B) increase interest rates. C) sell bonds. D) increase the money supply.
Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:
a. is buying too much pizza and not enough soda. b. should purchase more pizza and less soda. c. has maximized his or her total utility. d. needs to equate the marginal utilities for pizza and soda.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
___________ is the study of how people behave in strategic situations.
Fill in the blank(s) with the appropriate word(s).