"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." This statement illustrates:
a. the fallacy of composition
b. the basic principle of economics.
c. a normative economic statement.
d. a positive economic statement.
c
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The following are impediments to economic growth EXCEPT
A) dead capital. B) increased education. C) lack of economic freedom. D) bureaucratic inefficiency.
If a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output, which of the following is true? A firm will:
A. lose money and shut down in the short run if price falls below $15.
B. lose money, but continue to operate in the short run if price is at least $15.
C. make positive profits any time the price is greater than $15.
D. All of these are true.
If the government reduced the minimum wage and pursued contractionary monetary policy, then in the long run
a. both the unemployment rate and the inflation rate would be lower. b. the unemployment rate would be lower and the inflation rate would be higher. c. the unemployment rate would be higher and the inflation rate would be lower. d. the unemployment rate and the inflation rate would be higher.