From a standpoint of resource allocation, a surplus of corn implies
a. the price of corn is too low and should be increased
b. consumers would prefer some of the resources used to produce corn be used to produce something else.
c. the market for agricultural products is failing.
d. the quantity demanded of corn exceeds the quantity supplied.
e. government should purchase the surplus to protect the farmers.
Ans: b. consumers would prefer some of the resources used to produce corn be used to produce something else.
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Which of the following statement or statements are correct about potential GDP?
i. Actual real GDP equals potential GDP when the economy is at full employment. ii. Real GDP can be less than potential GDP. iii. When real GDP equals potential GDP, it also equals nominal GDP. A) i only B) ii only C) ii and iii D) i and ii E) i, ii, and iii
According to the Keynesian transmission mechanism (and assuming there is no liquidity trap and investment is not interest insensitive), if the money supply increases, the interest rate __________, investment spending __________ and the AD curve shifts to the __________
A) falls; falls; left B) rises; rises; right C) falls; rises; left D) falls; rises; right E) rises; falls; right
What is the lowest price the firm would accept in the short run?
The absolute price of a good is the price of that good in terms of another good
Indicate whether the statement is true or false