Arbitrage keeps markets from reaching equilibrium
Indicate whether the statement is true or false
F
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Many economists think that, in the long run, the economy tends to move toward
a. the natural or full-employment rate of unemployment. b. the natural or full-employment rate of inflation. c. a severe slump with high unemployment. d. an accelerating rate of inflation.
Assume that Country X and Country Y are trading partners and the exchange rates are fixed. If prices in Country Y rise, all of the following are expected to happen except
a. Country X will export more. b. Country Y will import more. c. Net exports will rise for Country X. d. Trade will boost Country Y GDP.
Neutral taxes do not impose excess burdens.
Answer the following statement true (T) or false (F)
Suppose a perfectly competitive market is in long-run equilibrium. If there is a permanent increase in demand,
A) at least in the short run, some firms will increase their output. B) at least in the short run, the price will increase initially. C) new firms will enter the market. D) All of the above answers are correct.