In the macroeconomic model of aggregate supply and aggregate demand:
A. quantity represents GDP.
B. price is calculated as a weighted average of the prices of all goods and services.
C. price is the overall price level.
D. All of these are true.
Answer: D
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Which condition would generate a violation of the Ricardian Equivalence?
A) downward sloping labor supply curve B) underdeveloped credit markets C) inflationary monetary policy D) deflationary monetary policy
In any economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of
a. government to allocate scarce resources. b. supply and demand to allocate scarce resources. c. credit cards to allocate scarce resources. d. nature to allocate scarce resources.
What is the primary benefit to the United States of a low price for the dollar in the foreign exchange market?
A. It encourages exports, helping producers. B. It makes foreign goods cheaper, helping consumers. C. There are no benefits to the United States of a low price for the dollar; a higher price is always better. D. It helps keep inflation under control.
Pure competition produces a socially optimal allocation of resources in the long run because:
A. Marginal cost equals marginal revenue B. Marginal cost equals average total cost C. Marginal revenue equals price D. Marginal cost equals price