Suppose that wages and prices are quite flexible, so that the short-run aggregate supply curve is steep. In that case, ________
A) policies to stabilize inflation are probably needed more than policies to stabilize economic activity
B) supply shocks will destabilize inflation, but have minimal impact on output
C) demand shocks will destabilize output, but have minimal impact on inflation
D) all of the above
E) none of the above
A
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Refer to Table 2-2. Assume Billie's Bedroom Shop only produces pillows and blankets. A combination of 5 pillows and 21 blankets would appear
A) along Billie's production possibilities frontier. B) inside Billie's production possibilities frontier. C) outside Billie's production possibilities frontier. D) at the vertical intercept of Billie's production possibilities frontier.
A wealth tax can be justified because it
A. helps to correct certain (inevitable) problems that arise in the administration of an income tax. B. the higher an individual's wealth, the greater his or her ability to pay, other things - including income - being the same. C. reduces the concentration of wealth, which is desirable socially and politically. D. are payments for benefits that wealth holders receive from government. E. all of these answer options are correct.
In common value auctions
a. Every bidder know the value of the object being sold b. Each bidder makes the same estimate of the value of the good c. Bidders do not know the estimates of the others d. The true value of the item differs across bidders
Suppose government spending decreases by $10 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)
A. increase in equilibrium real GDP equal to $50 billion. B. decrease in equilibrium real GDP equal to $50 billion. C. decrease in equilibrium real GDP equal to $80 billion. D. increase in equilibrium real GDP equal to $80 billion.