Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting downward
C. Aggregate demand shifting rightward
D. Aggregate demand shifting leftward
Answer: B
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Cartel agreements are difficult to sustain because:
A. cartel members do not face the economic incentives inherent in a prisoner's dilemma. B. it's a dominant strategy for each cartel member to cheat on the cartel agreement. C. the collective payoff to all the cartel members is lower when they all abide by the cartel agreement. D. it's usually easy to discover if one of the members has cheated.
Decisions to reduce the money supply are made by ________ and are an example of ________ policy.
A. the President; monetary B. the Federal Reserve; fiscal C. Congress; monetary D. the Federal Reserve; monetary
"Mediocre economists often consider only the immediate direct effects of a change, whereas a good economist will also consider indirect effects that may only become observable over time." This statement most clearly emphasizes
a. the law of comparative advantage. b. the importance of secondary effects. c. the gains derived from voluntary exchange. d. economizing behavior.
Existing employees prefer:
A. negative elastic supplies of labor. B. elastic supplies of labor. C. unit-elastic supplies of labor. D. inelastic supplies of labor.