Potential output of the country when viewed over long periods of time:
A. tends to rise over time.
B. is surprisingly constant.
C. always decreases.
D. rises in spurts and then starts a downward trend that can last years.
Answer: A
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The Great Depression was characterized by:
A. unemployment exceeding 25 percent. B. the Roaring Twenties. C. accelerated economic growth. D. firms rapidly expanding their borrowing rates.
In general, individuals and nations should specialize in producing those goods for which they have a(n):
A. absolute advantage and a comparative advantage. B. comparative advantage. C. absolutely comparative advantage. D. absolute advantage.
In the production of goods and services, trade—offs exist because
A) not all production is efficient. B) society has only a limited amount of productive resources. C) buyers and sellers often must negotiate prices. D) human wants and needs are limited at a particular point in time.
Which of the following is not an assumption of the Cournot model presented in the text?
A. Both firms maximize profits. B. If the first firm cuts price, the second firm will follow and if the first raises price, the second will not follow. C. There are two firms in an industry. D. Each firm takes the output of the other firm as given.