In situations of sticky prices and negative demand shocks, we would expect firms to:
A. deplete inventories before increasing production.
B. reduce production before building up inventories.
C. build up inventories before reducing production.
D. lower prices before reducing production or building up inventories.
Answer: C
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What is understood by infant industry arguments against free trade?
What will be an ideal response?
Which of the following statements is true?
a. If the income elasticity of demand is less than zero, the good is an inferior good. b. Only if the demand curve is vertical will sellers raise the price by the full amount of a tax. c. Two goods are substitutes if the cross-elasticity of demand coefficient is positive. d. A price elasticity of supply coefficient equal to 1.5 means the product exhibits an elastic supply and a 10 percent increase in the price will increase the quantity supplied by 15 percent. e. All of these.
The effect of an increase in aggregate supply is a(n):
a. increase in the general level of prices and a decrease in real output. b. increase in the general level of prices and an increase in real output. c. decrease in the general level of prices and a decrease in real output. d. decrease in the general level of prices and an increase in real output.
Government re-training programs, such as those that train workers who have lost their jobs due to outdated skills, would best fight the problem of
a. frictional unemployment b. cyclical unemployment c. structural unemployment d. underemployment e. seasonal unemployment