Which of the following would not be a policy option to eliminate an AD shortfall?
A. Reduce transfer payments.
B. Increase transfer payments.
C. Increase government purchases.
D. Reduce taxes.
Answer: A
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Suppose that productivity-enhancing technological progress affected more the production of chairs than the production of tables. This can be depicted using a production possibilities frontier in which
A) only the chair axis intercept increases. B) only the table axis intercept decreases. C) both intercepts increase; however, the chair intercept increases by more. D) both intercepts increase; however, the chair intercept increases by less.
A dedicated professor loves being in the classroom and would teach for $70,000 per year, but he is actually paid $80,000 per year. This individual
A) receives economic rent of $150,000. B) has an opportunity cost of $80,000. C) has an opportunity cost of $70,000. D) receives economic rent of $10,000.