Suppose your friend is strong on defense and insists that we must bolster our national defense, whatever the cost. How can you use economic logic to make him or her aware of the opportunity costs associated with his or her objective?
Ans: Use the production possibilities curve to show that increased resources allocated to national defense entail decreased amounts of other goods and services.
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If the quantity of capital per worker in the economy increases
A) the amount of money held by workers increases. B) labor productivity increases. C) the stock of human capital necessarily increases. D) the stock of financial assets held by the public increases.
A price ________ is a regulated ________ that must be set below the equilibrium price to have an effect
A) floor; price B) floor; quantity C) ceiling; price D) ceiling; quantity
Inflation targeting refers to conducting ________ policy so as to commit the central bank to achieving a ________
A) monetary; publicly announced level of inflation B) fiscal; publicly announced level of inflation C) fiscal; zero inflation rate D) monetary; zero inflation rate
The following are impediments to economic growth EXCEPT
A) dead capital. B) increased education. C) lack of economic freedom. D) bureaucratic inefficiency.