Suppose that the economy is in long-run equilibrium and the government decided to engage in expected expansionary policy by increasing the money supply
If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run?
A) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease.
B) The unemployment rate will increase, real GDP will increase and the price level will increase.
C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase.
D) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
C
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The tragedy of the commons is the absence of incentives to
A) correctly measure the marginal social benefit from a common resource. B) prevent under use of the common resource. C) prevent overuse and depletion of a common resource. D) discover the common resource.
In surveying their alumni, State U's economics department discovered that ramen noodle consumption declined once students graduated and found jobs. One conclusion the survey team might draw from this result is that:
A. ramen noodles are an inferior good. B. college graduates have a high reservation price for ramen noodles. C. there is excess demand for ramen noodles. D. the equilibrium price for ramen noodles is too high.
The federal government facilitated suburbanization by providing _______________ and ___________________.
Fill in the blank(s) with the appropriate word(s).
A tax on sellers:
A. shifts the demand curve vertically downwards by the amount of the tax, but does not affect the supply curve B. causes equilibrium price and quantity to decrease. C. causes a shortage in the market. D. shifts the supply curve vertically upwards by the amount of the tax, but does not affect the demand curve.