When will an increase in aggregate demand not result in lower unemployment rates in the short run?
What will be an ideal response?
An increase in aggregate demand will not result in lower unemployment rates in the short run if there is no change in the level of output relative to potential GDP as a result of the increase in aggregate demand. If, for example, aggregate supply increases and potential GDP increases at the same time that aggregate demand is increasing, the unemployment rate (and inflation) may remain unchanged.
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In the foreign exchange market, the quantity U.S. dollars demanded is a function of:
A) the amount of imports and the level of capital outflows. B) the amount of exports and the level of capital outflows. C) the amount of exports and the level of capital inflows. D) none of the above.
A 5 percent tax is going to be applied to a $100,000 tax base. What can be said about the revenue collected assuming dynamic tax analysis?
A) The total revenue will be zero. B) The total revenue will be between $0 and $5,000. C) The total revenue will be $5,000. D) There is not enough information to determine what revenues will equal.
Jim is haggling with a car dealer over the sale price of a used car. Which of the following would determine the amount of surplus Jim extracts from the purchase?
a. Total difference between the buyer's and seller's valuations of the car b. The number of customers trying to buy that particular car c. The number of sellers trying to make Jim a sale d. All of the above
When a perfectly competitive industry is in long-run equilibrium, firms maximize profits, and entry forces the price down
a. until all loss making firms leave the industry. b. until each firm can earn acceptable level of economic profit. c. until price becomes tangent to the long run average cost curve. d. until the long average cost curve rises above the demand curve.