The overall behavior of the economy:
A. is remarkably stable over time.
B. differs over time as prices become increasingly flexible in the months and years following a
shock.
C. differs over time as prices become increasingly sticky in the months and years following a
shock.
D. is easily controlled and stabilized by government policy.
Answer: B
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In the circular flow model, there are two types of markets: the ________ market and the ________ market
A) goods; factor B) supply; demand C) households; firms D) producers; consumers E) service; goods
Suppose we observe the price level increasing and real GDP decreasing. An explanation for this is that
A) the dollar weakened and the effect on aggregate supply was less than the effect on aggregate demand. B) the dollar weakened and the effect on aggregate supply was greater than the effect on aggregate demand. C) the dollar strengthened and the effect on aggregate supply was less than the effect on aggregate demand. D) the dollar strengthened and the effect on aggregate supply was greater than the effect on aggregate demand.
Suppose that an economy can produce various combinations of fish and bread. If more people with strong fishing skills became employed in this economy, how would the production possibilities curve (PPC) change?
a. The PPC would shift outward on the fish axis, but would not change on the bread axis. b. The PPC would shift outward equally along both the fish and the bread axes. c. The PPC would shift inward on the bread axis, but would not change on the fish axis. d. The PPC would shift inward equally along both the fish and the bread axes.
The cross price elasticities among substitute goods will be extremely high when
a. b and d b. they are very similar to each other c. people are consuming them frequently d. people consume them in equal quantities e. they are imperfect substitutes