Starting from an initial long-run equilibrium, under the adaptive expectations hypothesis, a shift to a more expansionary policy will increase
a. prices and unemployment in the long run.
b. real output in the short run but not in the long run.
c. real output in the long run but not in the short run.
d. real output in both the long run and the short run.
B
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The short-run market supply curve shows the relationship between the market price and the quantity supplied in the short run.
Answer the following statement true (T) or false (F)
A firm will not shut down in the short run as long as price exceeds:
A. average fixed cost at the level of output where marginal revenue equals marginal cost. B. average variable cost at the level of output where marginal revenue equals marginal cost. C. marginal cost at the level of output where marginal revenue equals marginal cost. D. total revenue at the level of output where marginal revenue equals marginal cost.
If a business figures out a better way for management to supervise the activities of the rank and file workers, the result would be
A. an increase in supply. B. an increase in the quantity supplied. C. a decrease in supply. D. a decrease in the quantity supplied.
Government actions that were taken in order to stimulate the economy during the Great Recession of 2007-09 included the following, except:
A. A significant reduction of interest rates to nearly zero B. A large increase in transfer payments C. An increase in the deficit-spending of the government D. A sharp increase in the natural rate of unemployment