According to the Lucas supply function, if people's expectations are on target, then the amount of output they produce
A. will always be above potential GDP.
B. will always be below potential GDP.
C. is directly related to the price level.
D. is not related to the price level.
Answer: D
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Suppose a shift of aggregate demand pushes the economy "southwest" away from full employment in the aggregate demand and supply diagram. Monetarists would recommend returning to full employment by
A) raising the money supply. B) lowering the money supply. C) waiting for the price level to rise. D) waiting for the price level to fall.
It is possible to distinguish a monopoly from perfect competition by noting that only competitive firms can earn economic profits in the short run.
Answer the following statement true (T) or false (F)
The Consumer Price Index was 115 one year and 120 the next year. The rate of inflation from one year to the next was approximately:
a. 2.2 percent b. 4.3 percent c. 2.9 percent d. 3.4 percent
Buyers will opt out of markets in which:
A. there are significant negative externalities. B. standardized products are being produced. C. there is inadequate information about sellers and their products. D. there are only foreign sellers.