Assume that an individual has to decide between a two-day vacation and a three-day vacation to the same place. If he uses optimization in differences, he will:
A) only think about the net benefits of the extra day.
B) compare the total net benefits of both alternatives.
C) choose the three-day vacation only if the costs incurred on the third day exceed the benefits he receives.
D) spend more time to come to a decision than if he would have used optimization in levels.
A
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As a result of the increased deficit associated with discretionary fiscal policy, _____
a. both the interest rate and real output fall b. both the interest rate and nominal output rise c. the interest rate falls and real output rises d. the interest rate rises and real output falls e. nominal output rises, real output falls, and the interest rate rises
Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true?
A. Tom has an opportunity cost of $41,000. B. Tom earns an accounting profit of $35,000. C. Tom experiences an economic loss of $6000. D. All of these are true.