One lesson of the Great Depression was that potential GDP could _____
a. be too low to ensure full employment if the population was growing
b. be too low to ensure full employment in a capitalist economy
c. be too low to ensure full employment in a market economy
d. fall short of full-employment GDP
e. exceed equilibrium GDP
e
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To close a recessionary gap, the Federal Reserve must ________ real interest rates by ________ the money supply.
A. increase; decreasing B. decrease; increasing C. increase; increasing D. decrease; decreasing
Which of the following is true of monopolistic competition?
A) There is only one seller in this market structure. B) The product sold by each seller in this market structure is identical. C) The firms in this market structure earn huge economic profits in the long run. D) There are a large number of sellers each selling a differentiated product.
If a reform of the tax laws encourages greater saving, the result would be
a. higher interest rates and greater investment. b. higher interest rates and less investment. c. lower interest rates and greater investment. d. lower interest rate and less investment.
A new Mexican restaurant opened in the town of Manchester. The residents of the town are
a. happy because of the product-variety externality, while other restaurant owners are unhappy because of the business-stealing externality. b. happy because of the business-stealing externality, while other restaurant owners are unhappy because of the product-variety externality. c. unhappy because of the product-variety externality, while other restaurant owners are happy because of the business-stealing externality. d. unhappy because of the business-stealing externality, while other restaurant owners are happy because of the product-variety externality.