When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

A.

remains constant.

B.

decreases.

C.

increases.

D.

might increase, decrease, or remain constant depending on how much people value the additional units of the good.

E.

cannot be predicted.

Which of the following is correct about comparative advantage?

A.

Having a comparative advantage without an absolute advantage is impossible.

B.

Some countries will have a comparative advantage in everything.

C.

A comparative advantage in a good means that the country can produce more of the good than any other country.

D.

A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country.

E.

None of the above answers is correct.

When Ferrari decides to produce 1,200 360 Modenas each year, Ferrari is answering the ________ question.

A.

for whom

B.

why

C.

scarcity

D.

what

E.

how

Which of the following is included in U.S. GDP? i) the rental value of homes owned by U.S. citizens. ii) the production of Suburban SUVs by GM in its plant in Mexico. iii) Tickets sold by U2 for concerts held in the United States.

A.

i only.

B.

i and iii.

C.

ii only.

D.

i, ii and iii.

E.

ii and iii.

As more women decide to work outside the home and therefore hire others to work around their home, GDP will increase by the value of

A.

the value of the output produced by the newly working women plus the value of any household work they are now hiring someone to perform.

B.

only the value of the household work they are now hiring someone to perform.

C.

the value of the output produced by the newly working women minus the value of the household work they were previously performing.

D.

only the value of the output produced by the newly working women.

E.

the value of the household work they were previously performing minus the value of the output produced by the newly working women.

A bank reports reserves of $500,000, physical capital of $200,000, loans of $1,000,000, deposits of $1,000,000, and owners' equity of $500,000. If the desired reserve ratio is 5 percent, the bank's desired reserves are

A.

$50,000.

B.

$500,000.

C.

$25,000.

D.

$1,000,000.

E.

$10,000.

Structural change influences the unemployment rate and such structural change is created by changes in

A.

technology.

B.

population.

C.

real GDP.

D.

the seasons.

E.

the minimum wage.

Mothers Against Drunk Drivers (MADD) campaigned to increase the legal penalties of drunk driving. This successful campaign ________ of drunk driving

A.

increased the marginal cost

B.

decreased the marginal cost

C.

decreased the marginal benefit

D.

increased the marginal benefit

E.

increased the sunk cost

The Taylor rule is an example of

A.

a targeting rule focused on the monetary base.

B.

an instrument rule based on M1.

C.

an instrument rule focused on the monetary base.

D.

a targeting rule focused on the federal funds rate.

E.

an instrument rule focused on the federal funds rate.

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP, there is an inflationary gap.

B.

an above

fullemployment

equilibrium.

C.

a falling real GDP.

D.

a rising price level.

E.

a recessionary gap.