In 1971, the U.S. government banned cigarette advertising on radio and television. After the ban was imposed, an economist would predict that the price of magazine ads would
A. increase.
B. decrease.
C. increase, but only for cigarettes.
D. not be affected by this ban.
Answer: A
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The quantity of real GDP supplied decreases if the price level ________ because it ________ profits
A) falls; decreases B) rises; increases C) rises; decreases D) falls; increases E) None of the above answers is correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes.
The number of persons who could become lawyers or surgeons is potentially quite large, yet these two groups earn fairly high incomes. One of the main reasons why they do is the
A. return on the investment of many years of training. B. evening-out of their low income during schooling. C. rent on their unique and rare talents. D. scarcity value of their abilities.
When the price level increases, the effect of a change in government spending on real GDP will be understated
a. True b. False Indicate whether the statement is true or false
Potential GDP is an estimate of the economy’s ability to produce goods and services if the
A. labor force is fully employed. B. price level is stable. C. trade balance is zero. D. federal budget is balanced.