Suppose that the government implements expansionary fiscal policy that raises aggregate demand, but individuals incorrectly anticipate the policy measure (bias upward). According to new classical theory, in the short run the price level would ____________ and Real GDP would ______________. In the long run, new classical theory would predict that the price level would ______________ compared to
its original long-run equilibrium level and that Real GDP would _____________.
A) rise; decline; rise; remain unchanged
B) fall; rise; rise; remain unchanged
C) rise; decline; remain unchanged; rise
D) fall; rise; remain unchanged; rise
A
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A rival good
A) is one that is used up as it is consumed. B) is one that rival firms are trying to obtain. C) is exclusive. D) cannot be shared.
As new monopolistically competitive firms enter the market, the demand facing each firm __________, causing the price charged by each firm to __________. In the long run, each firm will earn a __________ profit
a. falls; rise; positive b. rises; fall; positive c. falls; rise; normal d. rises; fall; normal e. falls; fall; normal
Each of the following, except one, can explain why a given job pays a compensating wage differential. Which is the exception?
a. The job requires costly training. b. The job is dangerous. c. The job is in a city with a high cost of living. d. The job requires a very high level of physical exertion. e. An increase in product demand raises the demand for labor in this job.
International trade occurs whenever
a. two nations have achieved internal economic efficiency b. one of the trading nations is self-sufficient c. one nation can profit from trade at the expense of another d. two nations can benefit from trading with each other e. labor is cheaper in one country than in another