If we are considering the relationship between two variables and release one of the other- things-equal assumptions, we would expect:
A. the relationship to change from direct to inverse.
B. the line representing that relationship on a graph to shift.
C. the data points to have a tighter fit to the line representing the relationship.
D. the relationship to change from inverse to direct.
Answer: B
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On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap. The opportunity cost of attending the
afternoon class is A) forgoing the nap. B) missing seeing the movie with your friend. C) giving up the time to study for the next morning's exam. D) being unable to engage in all three of the above activities.
The reason that stagflation tends to follow an inflationary gap is that
A. output tends to fall even as prices continue to rise as part of the self-correcting mechanism. B. government officials tend to overact in controlling inflation. C. businesses try to increase profits by raising prices and increasing output. D. workers accept pay cuts to maintain employment.