A cyclical deficit is the portion of the deficit that exists when:
A. the economy is at potential income.
B. inflation is fully anticipated.
C. inflation is not fully anticipated.
D. the economy is below potential income.
Answer: D
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The central question in economics is how to
A. make the best use of scarce resources. B. use government planning agencies. C. induce people to want less. D. increase human knowledge.
In a perfectly competitive industry, the price of good A is $2 . If a firm in this industry decides to increase its price to $2.50, it will:
a. realize an increase in profit of $0.50 per unit output. b. be able to increase the quantity sold of good A. c. be unable to sell any quantity of good A that is produced. d. lose some of its customers in the market. e. experience a decrease in profit of $0.50 per unit output.
The sum of consumers' surplus and producers' surplus is maximized at equilibrium
Indicate whether the statement is true or false
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.