Government-imposed limits on price movements are likely to
A. increase economic efficiency.
B. decrease economic efficiency.
C. leave economic efficiency unchanged.
D. promote economic growth in the economy.
Answer: B
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The price of labor in the agricultural industry has just increased. For agricultural products, this will lead to
A) an increase in price and a decrease in quantity. B) an increase in price and an increase in quantity. C) a decrease in price and a decrease in quantity. D) a decrease in price and an increase in quantity.
The foreign holdings of U.S. dollars
a. reduce the living standards of Americans. b. are not included in the M1 money supply. c. account for approximately half of all U.S. currency issued by the Fed. d. are hard to explain since the dollar is not legal tender outside the United States.
Actual GDP will be below potential GDP
a. when the economy is at full employment. b. during an economic boom. c. when resources are fully utilized. d. during a recession.
Within the framework of the AS/AD model, which of the following is a true statement regarding short-run aggregate supply?
a. An increase in prices temporarily improves profit margins because important components of costs are fixed in the short run. b. An increase in prices leads to higher interest rates, which temporarily improves profit margins. c. An increase in prices leads to an expansion in the money supply, which stimulates additional output. d. An increase in prices increases real wage rates and thereby expands the size of the economy's resource base.