Taking money from a wealthy individual in order to feed a destitute family would be a
Pareto improvement.
The efficient markets theory of stock prices, implies that
A family on a trip budgets $800 for restaurant meals and fast food. The price of a
fast-food meal is $20 and the family can afford 16 restaurant meals if they don’t buy
any fast food. How many fast-food meals would the family gain if they gave up one
restaurant meal?
The principle of asset valuation applies to
At the peak of a business cycle, employment and GDP are
a. at their lowest
b. at their highest
c. rising
d. falling
e. it is impossible to state for certain what is happening to employment and GDP
Which of the following could help explain why professional football players have high
salaries?
When individuals concentrate on a limited number of productive activities, this is
known as
Why does a change in GDP affect unit costs and the price level?
a. as GDP increases, productivity increases.
b. as GDP increases the price of non-labor inputs increases and the nominal wage tends
to increase.
c. as GDP decreases, there are efficient gains
d. as GDP increases, economies of scale allow for lower unit costs.
e. as GDP increases the price of non-labor inputs decreases and the nominal wage tends
to increase.
GDP is used in the __________ to __________.
a. long run; alert us to recessions
b. short run; alert us to recessions
c. long run; gauge the success of monetary policy
d. short run; measure changes in the standard of living
e. short run; check for inflation
Suppose the Consumer Price Index (CPI) increased by 5 percent over each of the last 5
years while the GDP price index increased by 12 percent annually. Which of the
following reasons could explain this difference?
a. Police unions across the country agreed to substantial salary cuts.
b. Import good prices increased relative to domestic good prices.
c. The price of used automobiles increased substantially relative to the prices of other
goods.
d. The price of fighter planes dropped due to increased competition in the aerospace
industry.
e. The price of investment goods purchased by businesses increased substantially
relative to the prices of all other goods.
Which of the following is an injection into the circular flow?
a. household saving and government spending
b. business investment and household saving
c. net taxes and household saving
d. government spending and business investment
e. net taxes and government spending