Suppose the economy is initially in long-run equilibrium. For each of the shocks listed below, explain the long-run effects on output and the price level
(a) Labor supply decreases.
(b) The government shuts down the Bureau of Economic Analysis.
(c) Productivity increases.
(a) Output declines and the price level rises.
(b) Output is unchanged and the price level falls.
(c) Output rises and the price level falls.
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The best way to evaluate the effect of a specific tax is _____
a. to consider the tax in isolation b. to consider the tax in the context of the entire tax system c. to consider whether a tax is progressive, regressive, or proportional d. a and c
If the wage rate is $5 per hour, regardless of how many laborers are employed, the
a. total labor cost curve is horizontal b. total labor cost curve is upward sloping c. MPP must be constant d. total labor cost curve will increase at an increasing rate e. total labor cost curve will increase at a decreasing rate
Graphically, producer surplus is the area below the price line and above the supply curve
a. True b. False Indicate whether the statement is true or false
Which of the following is true?
A. People tend to enjoy the process of buying a car more when the process involves difficult choices. B. Budgeting your income will often result in less total spending. C. High prices and rebates on cars simply irritate the consumer and make him feel treated like a fool. D. People prefer the toll ways where they throw in some change every dozen miles or so to a toll road that has one payment at the end of the trip.