Which of the following is the best definition of economics?
a. An investigation of the quantities and prices of the various goods produced by the nations of the world.
b. A study of why inflation and unemployment periodically plague the U.S. economy.
c. An analysis of how individuals and societies deal with the problem of scarcity.
d. An examination of the role that money plays in the economy.
e. A study of how goods and services are distributed throughout the world.
C
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Which of the following best describes the vicious cycle of poverty? a. Rich countries eventually decline because its citizens become lazy
b. Poor countries eventually improve through investment in education, infrastructure, and capital accumulation. c. Rich countries stay rich through continued high levels of investment in education, infrastructure, and capital accumulation. d. Poor countries stay poor because they cannot afford to invest in education, infrastructure, and capital accumulation.
Suppose that a labor union negotiates an increase in wages of 4 percent for the coming year because annual inflation for the past five years has been 4 percent. The expectations formed by the union are:
a. pessimistic expectations. b. deductive expectations. c. rational expectations. d. adaptive expectations. e. optimistic expectations.