How do we adjust a current-period market graph to incorporate user costs?
a. Subtract the user costs from the supply curve
b. Add the user costs to the supply curve
c. Subtract the user costs from the demand curve
d. Add the user costs to the demand curve
e. Add the user costs to both the supply curve and the demand curve
Answer: b. Add the user costs to the supply curve
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During a war, a government will often draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?
A. The value of the civilian goods no longer produced by the new soldiers B. The cost of feeding and clothing the new soldiers C. The dollar cost of the payroll D. The higher prices of civilian goods due to wartime shortages E. The cost of transporting the soldiers to combat
Which of the following items is counted as part of government purchases?
a. The federal government pays $2,000 in Social Security benefits to a retired person. b. The city of Athens, Ohio pays $10,000 to a tree-trimming firm to trim trees along city boulevards. c. The state of Nebraska pays $1,000 to help a low-income family pay its medical bills. d. All of the above are correct.
In the absence of trade between the two countries, the price of rice in China in terms of radios would be
A. 1/2.
B. 2.
C. 150.
D. 300.
Supposed people anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest rate is 4 percent, what will be the nominal (money) interest rate?
What will be an ideal response?