Which of the following is a statement of positive economics?
a. Government control of rent is a fair way to help poor people afford housing.
b. Government control of rent keeps landlords from charging too much rent.
c. Government control of rent decreases the number of new apartments constructed.
d. Government control of rent is an injustice.
c
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In the figure above, suppose the demand for dollars temporarily decreases so that the demand curve shifts to D2. To maintain the target exchange rate, the Fed
A) can sell dollars. B) can buy dollars. C) must violate both interest rate parity and purchasing power parity. D) cannot maintain the target exchange rate.
An employer faces a higher minimum wage control where it cannot pay its workers any less than $10.25 an hour. The employer may react by
a. Doing nothing-it cannot violate the regulation b. Offering the employees fewer fringe benefits c. Increasing spending on workplace amenities d. Hiring additional workers
When an economy's actual output is smaller than its potential at some point in time, we say that it is experiencing:
A. a positive output gap. B. a negative output gap. C. inflation. D. deflation.
Sketch a perfectly competitive firm operating in short-run equilibrium but making economic losses. Put in all the functions necessary to show that the firm should stay in business in the short-run despite the losses. Shade in the area of loss shown by the drawing.
What will be an ideal response?