Macro Final
Wool sweaters and cotton sweaters are substitutes. An increase in the price of wool sweaters will lead to __________ in the equilibrium price of cotton sweaters and ___________ in the equilibrium quantity of cotton sweaters.
increase, increase
If a country went from a government budget deficit to a surplus, national saving would
increase, shifting the supply of loanable funds right.
In 2001, the United States was in recession. Which of the following things would you not expect to have happened?
increased investment spending
A higher leverage ratio ________________ the rate of return on capital for banks in good financial times for the bank and makes them _______________ likely to fail in bad financial times for the bank.
increases, more
In an open economy, the source for the demand for loanable funds is
investment + net capital outflow
The "invisible hand" works to promote general well-being primarily through: -government regulations. -the political process. -people's pursuit of self-interest. -generosity.
people's pursuit of self-interest.
If a country has Y > C + I + G, then it has
positive net capital outflow and positive net exports.
According to the quantity theory of money, a 3 percent increase in the money supply with no other changes in the economy would cause ______________ to increase by 3 percent.
prices but not real gdp
The ability to profit by purchasing wheat in the U.S. and selling it in China implies that the
real exchange rate is less than 1.
In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange model is the
real exchange rate.
An increase in quantity supplied
results in a movement upward and to the right along a fixed supply curve.
If the supply of dollars in the market for foreign-currency exchange shifts left, then the exchange rate
rises and the quantity of dollars exchanged falls.
An economic expansion caused by a shift in aggregate demand remedies itself over time as the wage level
rises, shifting aggregate supply left.
Which of the follow are not counted in the investment component of GDP -household purchases of new housing. -spending on stocks and bonds. -inventory accumulation. -spending on capital equipment.
spending on stocks and bonds.
Savers are _______________ of loanable funds. Investors are ____________ of loanable funds.
suppliers, demanders
If a country raises its budget deficit, then in the market for foreign-currency exchange
supply shifts left.
One important activity of the the Federal Reserve is to conduct monetary policy. This is done through the decisions of
the Federal Open Market Committee
Suppose the price of domestically produced industrial heavy equipment for construction has increased. This price increase will be reflected in
the GDP deflator but not in the consumer price index.
Which of the following areas of study typifies macroeconomics as opposed to microeconomics? -how tariffs on shoes affects the shoe industry -the effect on the economy of changes in the nation's unemployment rate -the effects of rent control on the availability of housing in New York City -the economic impact of tornadoes on cities and towns in Oklahoma
the effect on the economy of changes in the nation's unemployment rate
Consider a production possibilities frontier showing production possibilities for two goods, shirts and shoes. Which of the following concepts cannot be illustrated by this model? -the opportunity cost of shirts in terms of shoes -the effect of economic growth on production possibilities involving shirts and shoes -the flow of dollars between sellers of shirts and shoes and buyers of shirts and shoes -the tradeoff between production of shirts and production of shoes
the flow of dollars between sellers of shirts and shoes and buyers of shirts and shoes
Which of the following is not an example of physical capital? -the office chair in a lawyer's office -a new factory building -the knowledge of workers -a delivery van
the knowledge of workers
If purchasing-power parity holds, the price level in the U.S. is 250, and the price level in Japan is 260, which of the following is true?
the nominal exchange rate is 260/250
Suppose a closed economy had public saving of -$3 trillion and private saving of $4 trillion. What are national saving and investment for this country?
$1 trillion, $1 trillion
Suppose interest of 6% each year for two years can be earned on $1,000 saved today with no risk. What is the least amount a person would need to have a 50% chance of winning to be willing to face a 50% chance of losing $1,000 today and be considered risk averse?
$1,123.61 to be paid in two years
Consider Byron's decision to go to college. If he goes to college, he will spend $10,000 on tuition, $5,000 on room and board, and $1,000 on books. If he does not go to college, he will earn $9,000 working in a store and spend $4,000 on room and board. Byron's cost of going to college is
$21,000.
A Spanish Citizen spends a year working in the United States. The value of the services produced by this worker is included in: -Spanish GDP and Spanish GDP. -Spanish GNP and U.S. GDP. -U.S. GNP and U.S. GDP. -Spanish GDP and U.S. GNP.
Spanish GNP and U.S. GDP
Suppose someone accepts the efficient market hypothesis. Which of the following statements would that person consider to be incorrect? -Stock market prices tend to rise today if they rose yesterday. -At the market price, the number of shares being offered for sale matches the number of shares people want to buy. -Beating the market consistently is, at best, extremely difficult. -As judged by the typical person in the market, all stocks are fairly valued all the time.
Stock market prices tend to rise today if they rose yesterday.
Which of the following would decrease the money supply?
The Fed increases the rate it pays on reserves.
Suppose people living downstream from a manufacturer of lawn fertilizer are unable to swim in the river due to pollutants put in the river by the manufacturer. This is an example of
a market failure caused by an externality.
A country sells more to foreign countries than it buys from them. It has
a trade surplus and positive net exports.
The classical dichotomy and monetary neutrality are represented graphically by
a vertical long-run aggregate-supply curve.
The 'securities' we have on the bank balance sheet in this class are best thought of as loans
by that bank to government.
Since March, Americans have cooked more at home and eaten less from restaurants due to the COVID 19 virus. This change in behavior, by itself, will: -not affect measured GDP. -increase measured GDP. -decrease measured GDP by the value of the restaurant meals. -decrease measured GDP by the value added by the restaurant's preparation and serving of the meals.
decrease measured GDP by the value added by the restaurant's preparation and serving of the meals.
Suppose there was a large increase in net exports. If the Fed wanted to stabilize output, it could
decrease the money supply, which will increase interest rates.
Peanut butter and jelly are complements. When the price of peanut butter goes up, we would expect to see the equilibrium price of jelly ______ and the equilibrium quantity of jelly _________.
decrease, decrease
Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level
decreases the interest rate.
If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment
decreases, and U.S. net capital outflow decreases.
If U.S. citizens decide to save a larger fraction of their incomes, the real interest rate
decreases, the real exchange rate of the dollar depreciates, and U.S. net capital outflow increases.
Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are
diminishing returns to capital so the poor country grows faster.
Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S. currency must rise if the price level(s) in
foreign countries rise.
The purchase of U.S. government bonds by Egyptians is an example of
foreign portfolio investment by Egyptians.
A U.S. firm buys bonds issued by a technology center in India. This purchase is an example of U.S.
foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign bonds and increases U.S. net capital outflow.
Other things the same, an increase in the U.S. real interest rate induces
foreigners to buy more U.S. assets, which reduces U.S. net capital outflow
An example of something that has been used as commodity money is _____________________. the U.S. dollar bank reserves gold checkable deposits
gold
Suppose you hear that the interest rate for a one-year treasury bond has gone up. You can conclude the the price of the bond
has gone down.
Inward-oriented policies
include imposing tariffs and other trade restrictions.
Which of the following shifts short-run aggregate supply right?
a decrease in the price of oil
Consider two motorcycles manufactured by Harley Davison in 2019. During 2019, Harley Davison sold one of the two cars to Jeremy for $20,000. Later in the same year, Jeremy sold the car to Alexa for $19,000. The second motorcycle, with a market value of $17,500, was unsold at the end of 2019 and it remained in Harley Davison's inventory. How much do the transactions just described contribute to GDP for 2019?
$37,500
Alexi makes bread and sells it at the market. She spends $1.00 on ingredients and sells the bread for $4.00. What's the total contribution to GDP each time Alexi sells a loaf of bread?
$4
A country has private saving of $100 billion, public saving of -$30 billion, domestic investment of $50 billion, and net capital outflow of $20 billion. What is its supply of loanable funds?
$70 billion
In 2019, Chevron Corporation had total earnings of $40 million and 10 million shares of the corporation's stock were outstanding. If the price-earnings ratio for ABC is 20, then what is the price of a share of its stock?
$80
A country has national saving of $90 billion, government expenditures of $30 billion, domestic investment of $50 billion, and net capital outflow of $40 billion. What is its demand for loanable funds?
$90 billion
Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services. What is the value of net exports?
-$10 million
If the nominal interest rate is 2 percent and the rate of inflation is 8 percent, then the real interest rate is
-6%
The largest reduction in a portfolio's risk is achieved when the number of stocks in the portfolio is increased from
1 to 10.
Cole is refinishing an antique china cabinet and has already spent $400 on the restoration. He expects to be able to sell the cabinet for $600. Cole discovers that he needs to do an additional $300 worth of work to make the cabinet worth $600 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $200. For Cole the marginal benefit of completing the project is [ Select ] ["$200", "$400", "$300", "$100"] and it [ Select ] ["would", "would not"] be rational for him to finish it.
1. 400 2. would
At peak unemployment in the current crisis, the unemployment rate for women had increased _____________ . Currently the unemployment rate for women is about ___________.
1. At peak unemployment in the current crisis, the unemployment rate for women had increased more for women than for men . Currently the unemployment rate for women is about a percentage point higher for women than for men . 2. about the same for women as for men
Suppose the supply curve is flat. Then the tax incidence will fall mostly on ________ because suppliers are ______ responsive to price.
1. Demanders 2. more
You are running the Trading Desk at the Federal Reserve Bank of New York. You have been tasked with maintaining the federal funds rate at 1.3%. If the federal funds rate is 1.4% you would [ Select ] ["sell.", "buy"] bonds. If you have done a good job of keeping the federal funds rate at 1.3% but now the target federal funds rate changes to 1.35% you would [ Select ] ["sell", "buy"] bonds.
1. buy 2. sell
A well-diversified portfolio of stocks _______ market risk and ________ firm-specific risk.
1. cannot eliminate 2. can eliminate
The supply curve for a good has shifted because the cost of producing the good has gone down. At the same time, the demand for the good has shifted because it is a normal good and income has increased. For this good, we know that the equilibrium price [ Select ] ["will increase", "could increase or decrease", "will decrease"] and the equilibrium quantity [ Select ] ["could increase or decrease", "will decrease", "will increase"] .
1. could increase or decrease 2. will increase
Suppose the Federal Reserve increases reserve requirements. We would expect to see the money multiplier ________ and the money supply ________
1. decrease 2. decrease
Consider the loanable funds framework when both curves shift. An investment tax credit to encourage investment and government moving from having a balanced budget to having a surplus will [ Select ] ["cause the real interest rate to decrease", "have an ambiguous effect on the real interest rate", "cause the real interest to increase"] and [ Select ] ["cause the equilibrium quantity of loanable funds to decrease", "have an ambiguous effect on the equilibrium quantity of loanable funds", "cause the equilibrium quantity of loanable funds to increase"] .
1. have an ambiguous effect on the real interest rate 2. cause the equilibrium quantity of loanable funds to increase
Allied Business Consultants employs 5 researchers who each work 8 hour days. In one day the researchers prepared 10 reports for its largest client. What was Allied Business Consultants' productivity in report(s) per hour?
1/4
An Egyptian tourist is trying to decide if a watch for sale in the U.S. is a good deal and so wants to convert the price in U.S. dollars to Egyptian pounds. If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars costs
125 Egyptian pounds
If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?
2
If the CPI was 180 in 1980 and is 225 today, then $160 in 1980 purchased the same amount of goods and services as $______________________ purchases today.
200
Suppose that the adult population is 10 million, the number of employed is 4.5 million, and the labor-force participation rate is 60%. What is the unemployment rate?
25%
Consider the list below. How many people are unemployed? AllenUnpaid stay at home dad. He has not looked for work for several years.BenCollege president.AllisonPart-time welder. Actively looking for full time work.BrittanySelf-employed full-time wedding singer.CathyFull-time physicians assistant.CalvinRetired finance professor. Last applied for work 10 weeks ago.DianeLaid-off fork-lift operator expecting to be recalled. DavidWorks for a bicycle store. Age 70.EvelynManager of health food store. EliMuseum guard. Was not at work last week due to illness.FloraHas never been employed. Looked for a job last week. FrankFired from job as an investment banker. Last looked for work three weeks ago.
3
Suppose that in a closed economy GDP is equal to 30, government purchases are equal to 6, consumption equals 21, and taxes equal 5. What are private saving and public saving?
4 and -1, respectively
Real GDP per capita of the U.S. economy in 2019 was closet to ____________ times its 1947 level.
4.2
A farmer owns five acres of land. Each acre can produce either wheat or beans. The output of each acre in terms of units of wheat or units of beans is given in the table below. Acre Wheat. Beans 1. 20. 3 2. 16. 6 3. 12. 9 4. 8. 12 5. 4. 15 The farmer efficiently uses all 5 acres. Suppose 2 acres are used to produce beans. The opportunity cost of increasing the number of acres devoted to beans by one would be _______________ units of wheat per unit of beans.
4/3
In the economy of Faraway in 2019, net exports were -20, consumption was $40, GDP was $100, and government purchases were $40. What was investment in Faraway?
40
A farmer owns five acres of land. Each acre can produce either rice or beans. The output of each acre in terms of units of rice or units of beans is given in the table below. Acre RiceBeans 1 4 15 2 8 12 3 12 9 4 16 6 5 20 3 The farmer uses all of the land. The farmer is using land inefficiently if output is ________ units of rice and _________ units of beans.
48,15
Commerce Bank Assets Liabilities Reserves $20 Deposits $60 Loans $70 Debt $20 Securities $10 Capital ___ For the Commerce Bank, the leverage ratio is
5
In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar in China?
5 yuan
A farmer owns five acres of land. Each acre can produce either oranges or apples. The output of each acre in terms of units of oranges or units of apples is given in the table below. AcreApplesOranges 1 2 5 2 2 4 3 2 3 4 2 2 5 2 1 The farmer efficiently uses all 5 acres. If three acres are used to produce apples, how many units of oranges are produced?
9
The present value of a payment of $1,000 to be received two years from today if the interest rate is 4% is equal to _________________ dollars. (You will receive credit if your answer is within $1 of the correct answer.)
924.56 (with margin: 1)
Which of the choices below is closest to the price of a one-year $1,000 par value (face value) Treasury bond if the if the interest rate on this bond is five percent? $__________________
952
Which of the following is an example of U.S. foreign direct investment?
A U.S. based restaurant chain opens new restaurants in India.
Which of the following best illustrates moral hazard? -A person purchases health insurance and then takes on more risks than before when skiing down a mountain. -A person who lives in a flood zone buys flood insurance. -A person adds risky stock to his portfolio. -A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10.
A person purchases health insurance and then takes on more risks than before when skiing down a mountain.
We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that
Bond A was issued by Microsoft Corporation and bond B is issued by a risky startup.
A German firm purchases a bond issued by United Express, a U.S. delivery company. As a result what happens to U.S. net capital outflow?
It falls.
Which of the following is not correct? -Managed funds typically have a lower return than indexed funds. This tends to support the efficient market hypothesis. -Managed funds typically have a lower return than indexed funds. This is because they face higher costs. -Index funds typically have a higher rate of return than managed funds. This tends to support the efficient market hypothesis. -Index funds typically have a higher rate of return than managed funds. This tends is evidence against the efficient market hypothesis.
Index funds typically have a higher rate of return than managed funds. This tends is evidence against the efficient market hypothesis.
John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. Curtis lost his job in the oil industry due to low demand for that product and is training to take a job in the expanding health care field.
John and Curtis are both frictionally unemployed.
Which of the following is an example of a positive, as opposed to normative, statement?: -Low interest rates cause inflation. -Spending should decrease to offset the budget deficit. -The minimum wage should be increased. -Income taxes are the most fair type of tax.
Low interest rates cause inflation.
Aleta transfers $100 from her savings account to her checking account. As a result of this transfer by itself
M1 increases and M2 stays the same.
Which of the following is always correct in an open economy?
S = I + NCO
If a country has a trade deficit then
S< I and Y < C+I+G
Case 1. Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Refer to Case 1. What happens to the expected price level and what's the result for wage bargaining?
The expected price level falls. Bargains are struck for lower wages.
People sometimes say the government is paying its expenses by printing money. In the modern U.S. economy, which of the following is closest to this actually occurring? -The government builds a bridge. The Treasury Department prints dollars to pay for the bridge. The Federal Reserve approves the printing of new currency. -The government builds a bridge. The Federal Reserve sells bonds to pay for this bridge. The Treasury handles the sale of bonds on behalf of the Federal Reserve. -The government builds a bridge. The Federal reserve prints dollars to pay for the bridge. The Treasury Department approves the printing of new currency. - The government builds a bridge. The Treasury Department sells bonds to pay for this bridge. The Federal Reserve buys these bonds and holds them to maturity
The government builds a bridge. The Treasury Department sells bonds to pay for this bridge. The Federal Reserve buys these bonds and holds them to maturity.
Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor county to catch up?
The poor country has inward-oriented trade policies.
Which of the following is true? -The principle of absolute advantage explains why a highly productive country can gain from trading with a less productive country. -The principle of absolute advantage explains why a highly productive country cannot gain from trading with a less productive country. -The principle of comparative advantage explains why a highly productive country can gain from trading with a less productive country. -The principle of comparative advantage explains why a highly productive country cannot gain from trading with a less productive country.
The principle of comparative advantage explains why a highly productive country can gain from trading with a less productive country.
Consider the loanable funds framework. Which of the following would result in an increase in the equilibrium real interest rate and a decrease in the quantity of loanable funds?
The tax code changes in a way that discourages saving.
Which of the following is not correct concerning opportunity cost?: -Opportunity costs and the idea of trade-offs are closely related. -The opportunity cost of something is whatever you give up to obtain it. -Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway. -To compute opportunity costs, you should subtract benefits from costs.
To compute opportunity costs, you should subtract benefits from costs.
Suppose you have paid $12 to see a movie in a movie theatre. You realize the movie is boring so you leave. Which of the following is true?: -You have done the wrong thing because the marginal cost of watching more is zero. -You have done the right thing because marginal benefits should be ignored in decided whether to continue watching. -You have done the wrong thing because sunk costs cannot be ignored in deciding whether to continue watching. -You have done the right thing because sunk costs should be ignored in deciding whether to continue watching.
You have done the right thing because sunk costs should be ignored in deciding whether to continue watching.
Case 1. Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.Refer to Case 1. Which curve shifts and in which direction?
aggregate demand shifts left
The equilibrium price of a good has increased and the equilibrium quantity has decreased. This can be explained by : -a decrease in demand -an decrease in supply -an increase in supply -an increase in demand
an decrease in supply
Which of the following shifts the long-run aggregate supply curve to the right? Group of answer choices
an increase in capital stock.
Suppose that monetary neutrality and the Fisher effect both hold. An increase in inflation is caused by
an increase in the money growth rate.
Suppose someone has been unemployed for a long period of time. This person becomes discouraged and quits looking for work. Because of this eventually the unemployment rate
and the labor-force participation rate both decrease.
Other things the same, if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese yuan per dollar, then the dollar
appreciates and buys more Chinese goods.
Other things the same, if the exchange rate changes from .8 euros per dollar to .9 euros per dollar, the dollar
appreciates so U.S. goods become more expensive relative to foreign goods.
Suppose someone is categorized as structurally unemployed. Then this person is unemployed
because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium.
If you believe that stock prices follow a random walk, then probably you
believe in the validity of the efficient markets hypothesis.
Which of the following would cause investment spending to increase and aggregate demand to shift right?
both an increase in the money supply and an investment tax credit
If the Federal Reserve wishes to increase the money supply, it can ______________ bonds to _________________ reserves.
buy, increase
The interest rate in a country goes up while the value of its currency falls. This might be due to
capital flight
Aggregate demand shifts left when the government
cuts military expenditures.
A bicycle tire is considered a final good if it: -All of choices are correct. -is sold to a company that conducts bicycle tours of New York to put on one of their rented bikes. -is sold in a bike shop to a customer to replace a flat tire. -is sold to a bicycle shop that will put it on a new bicycle it is putting together to sell to a customer.
is sold in a bike shop to a customer to replace a flat tire.
For a self-sufficient producer, the production possibilities frontier
is the same as the consumption possibilities frontier.
When the U.S. real interest rate falls, purchasing U.S. assets becomes
less attractive and so U.S. net capital outflow rises.
A risk averse person
might take on risk if the potential reward is high enough.
Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners
more willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
During recessions, automatic stabilizers tend to make the government's budget
move toward deficit.
A country has a trade deficit. Which of the following must also be true?
net capital outflow is negative and domestic investment is larger than saving
In the open-economy macroeconomic model, if a country's supply of loanable funds shifts right, then
net capital outflow rises, so the supply curve in the foreign exchange market shifts right.
In the open-economy macroeconomic model, if investment demand decreases, then
net exports rise and the real exchange rate falls.
An economist claims that changes in the minimum wage and unemployment insurance have reduced unemployment. Which of these changes affect frictional unemployment?
only the changes in unemployment insurance
A U.S.-imposed quota on automobiles would shift
only the demand curve in the market for foreign-currency exchange right.
The bowed shape of the production possibilities frontier can be explained by the fact that: -all resources are scarce. -the only way to get more of one good is to get less of the other. -economic growth is always occurring. -the opportunity cost of one good in terms of the other increases as more of the good is produced.
the opportunity cost of one good in terms of the other increases as more of the good is produced.
Diminishing marginal utility does not help to explain
the popularity of gambling.
Case 1. Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Refer to Case 1. How is the new long-run equilibrium different from the original one?
the price level is lower and real GDP is the same.
Which of the following is not a determinant of the long-run level of real GDP? Group of answer choices
the price level.
Consider an identical basket of goods in both the U.S. and Taiwan. For a given nominal exchange rate, in which case is it certain that the U.S. real exchange rate with Taiwan falls?
the price of the basket of goods falls in the U.S. and rises in Taiwan.
Which of the following does purchasing-power parity conclude should equal 1?
the real exchange rate but not the nominal exchange rate
If the demand of loanable funds shifts left, then
the real interest rate and the equilibrium quantity of loanable funds both fall.
If the supply of loanable funds shifts left, then
the real interest rate rises and the equilibrium quantity of loanable funds falls.
The adage "don't put all your eggs in one basket" gives a useful insight into investing because splitting eggs across several baskets will assure
the same expected return with a lower standard deviation of returns.
After the financial crisis, large bond purchases by the Federal Reserve did not lead to inflation. One explanation of this offered in the recorded lectures is that ______________
the velocity of money decreased.
Which of the following is an example of using the scientific method with a natural experiment?: -observing the reaction when two chemicals are mixed together -comparing plant growth with and without a soil additive -measuring how long it takes a marble to fall from a ten story building -tracking the price of oil when a war in the Middle East interrupts the flow of crude oil
tracking the price of oil when a war in the Middle East interrupts the flow of crude oil
mid-priced car used to travel 100,000 miles without a major repair. Today a mid-priced car is expected to travel 200,000 miles without a major repair. To which problem in the construction of the CPI is this situation most relevant? -unmeasured quality change -introduction of new goods -substitution bias -income bias
unmeasured quality change
In preparing for an exam, it is rational to study: -until the marginal benefit of additional studying studying is equal to the marginal cost of additional studying. -as much as you can. -to the point where the marginal benefit of studying is maximized. -however long it takes to get a B or better on the exam.
until the marginal benefit of additional studying studying is equal to the marginal cost of additional studying.
Suppose a company would like to raise funds. As an alternative to selling bonds the company could instead: -invest in physical capital. -use debt finance. -use equity finance. -purchase stocks.
use equity finance.
If output is above its natural rate, then according to sticky-wage theory
workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left.