An example of a sunk cost would be:
A. the price of a lift ticket you bought and used to ski the whole day.
B. the nonrefundable deposit you put on your vacation rental.
C. the price of a lift ticket you bought and used for 1 run before you fell and broke your ankle.
D. All of these are examples of sunk costs.
Answer: D
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The fallacy in the strict crowding-out argument comes from supposing that
a. the Federal Reserve always accommodates the U.S. Treasury in its financing of the deficit. b. corporations always outbid small businesses for government contracts. c. the economy's flow of saving is fixed. d. investors will spend more when G increases.
According to monetarists, an expansionary fiscal policy:
A. will be ineffective because the interest rate will rise and crowd out private investment spending. B. should not be permitted so long as a public debt exists. C. should be used only when unemployment exceeds 6 percent of the labor force. D. will be effective, provided the money supply is held constant.