Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary
Answer: D
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If a worker receives 6 percent higher nominal wages over a year in which inflation is 2 percent, the worker's real wages have
A) risen by 8 percent. B) risen by 4 percent. C) risen by 3 percent. D) fallen by 3 percent. E) fallen by 4 percent.
Even when people know the purchasing power of the currency is declining, they continue to use the currency because
A) they have no other choice. B) its value is holding better than any other asset. C) its value is still predictable. D) it still has some intrinsic value.
If the price of tuna fish increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the tuna fish producer could increase its total revenue by
a. lowering price. b. decreasing quantity supplied. c. leaving price the same. d. raising price. e. decreasing supply.
How much pollution should we emit?
A. To a level where MB is greater than or equal to the MC B. To a level where MC is greater than the MB C. Zero D. A fair amount of pollution