What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?
What will be an ideal response?
The price must be greater than the marginal cost of producing the good.
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Starting from long-run equilibrium, a favorable inflation shock results in a short-run equilibrium with ________ inflation and ________ output.
A. lower; lower B. higher; lower C. higher; higher D. lower; higher
How is poverty measured? What is the extent of poverty in the developing world?
What will be an ideal response?
Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to
A) do nothing, because the economy is self-adjusting. B) raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences. C) increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences. D) reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.
Decreases in aggregate demand move the economy down the short run aggregate supply and up the Phillips Curve
a. True b. False Indicate whether the statement is true or false