A positive temporary supply side shock will:
A. increase the level of potential output in the long run.
B. decrease the price level in the long run.
C. increase the price level in the long run.
D. have no effect in the long run.
Answer: D
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Which of the following does not describe a characteristic of short-term economic fluctuations?
A. Expansions and recessions are irregular in length and severity. B. Durable-goods industries are less sensitive to short-term fluctuations than service and non-durable industries. C. Expansions and recessions are felt throughout the economy. D. The unemployment rate rises during recessions.
An increase in the nominal interest rate leads to
A) a movement upward along the demand for money curve. B) a rightward shift in the demand for money curve. C) neither a shift in nor a movement along the demand for money curve. D) a movement downward along the demand for money curve. E) a leftward shift in the demand for money curve.
All of the following observations concerning the elasticity formula are true except
a. the changes with which it deals is measured as a percentage change. b. each of the percentage changes is calculated in terms of the average values. c. the calculation considers both positive and negative signs. d. each percentage change is taken as an "absolute value."
Suppose that each week Henry buys 12 peaches and 3 apples at his local farmer's market. Both kinds of fruit cost $1 each. From this we can infer that:
A. if Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must be greater than his marginal utility from the 3rd apple he buys. B. Henry is not maximizing his utility. C. if Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must equal his marginal utility from the 3rd apple he buys. D. for Henry the law of diminishing marginal utility does not apply to peaches.