If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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In the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to
________, everything else held constant. A) up; rise B) up; fall C) down; rise D) down; fall
The study conducted by Eric Bond of Vanderbilt University on the repair histories of a large sample of pickup trucks over three years old ascertained that:
a. the repair costs of trucks held by original users was similar to those held by second hand users. b. the repair cost of trucks held by second hand users was higher compared to those held by original users. c. the repair cost of trucks held by original users was higher compared to those held by second hand users. d. the repair costs of trucks held by original users as well as those held by second hand users increased by the same magnitude every year.
As we move along a production possibilities curve and acquire larger and larger amounts of one good (e.g., guns), the sacrifices of the alternative good (e.g., butter) become larger and larger. This is an illustration of
A. the law of demand. B. the law of supply. C. decreasing opportunity costs. D. increasing opportunity costs.
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A. 30 LCD televisions that must be forgone to produce 60 additional OLED televisions. B. 90 LCD televisions that must be forgone to produce 20 additional OLED televisions. C. 30 LCD televisions that must be forgone to produce 20 additional OLED televisions. D. 120 LCD televisions that must be forgone to produce 40 additional OLED televisions.