Suppose the economy is in equilibrium with an output gap equal to zero and the actual inflation rate equals the expected inflation rate
If the economy experiences a negative demand shock, real GDP will become ________ potential GDP and the economy will move to the ________ along an existing Phillips curve. A) greater than; right
B) greater than; left
C) less than; right
D) less than; left
D
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We could increase the production of both heart transplants and round-the-world trips if we moved to point T from point
A. P.
B. Q.
C. R.
D. S.
If the equilibrium exchange rate is 15 pesos per dollar and the central bank fixes the exchange rate at 17 pesos per dollar then we can conclude that the peso is
(a) appreciated. (b) depreciated. (c) overvalued. (d) undervalued.
Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?
a. 2 houses b. 3 houses c. 5 houses d. 8 houses
During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?
A. This is an example of a market failure and is a reason for the government to regulate the industry. B. This is known as the lemons problem. C. Ajax is taking advantage of asymmetric information. D. The quality of the product could be improved if the amount of pollution can be reduced.