The opportunity cost of holding money refers to
A) the service fees associated with checking accounts.
B) the service fees associated with checking accounts plus the costs undertaken to prevent theft.
C) the interest that could have been earned if the money balances had been transferred to an interest-bearing asset.
D) the pleasure that would have been received if the money balances had been used to buy a good or service.
Ques. 2In the classical model
A) a decrease in aggregate demand will lead to a decrease in the price level and a decrease in real GDP.
B) changes in aggregate supply leave real GDP unchanged.
C) a decrease in aggregate demand will lead to an increase in the price level and a decrease in real GDP.
D) changes in aggregate demand affect only the price level, not real GDP.
Ques. 3A 5 percent tax is going to be applied to a 100,000 tax base. What can be said about the revenue collected assuming dynamic tax analysis?
A) The total revenue will be zero.
B) The total revenue will be between 0 and 5,000.
C) The total revenue will be 5,000.
D) There is not enough information to determine what revenues will equal.
Ques. 4When government intervenes in the production process because external benefits exist, it typically attempts
A) to impose a tax on each unit produced.
B) to shift the industry's demand curve to the left.
C) to shift the industry's demand curve to the right.
D) to shift the industry's supply curve to the left.
Ques. 5In the above figure, the combination of personal computers and televisions shown by point w
A) is an efficient use of society's resources because it is below the production possibilities curve.
B) is more desirable than point x because producing at point w does not put a strain on society's resources.
C) is attainable but involves the inefficient use of some of society's resources.
D) is beyond the capacity of society to produce.
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