An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Because the monopolist doesn't pay attention to the willingness to pay of inframarginal consumers:
A. there can sometimes be a difference between what level of product quality is profitable for the monopolist and what level of product quality maximizes aggregate surplus. B. the monopolist will choose the optimal level of product quality. C. the quantity chosen by the monopolist will sometimes maximize aggregate surplus. D. there can never be a difference between the marginal cost of higher product quality and the marginal value to consumers of higher product quality.
A market for a product reaches equilibrium when:
A. The actual quantity bought by buyers equals actual quantity sold by sellers B. The price rises further after there is a surplus C. Buyers intend to buy a quantity equal to the quantity that sellers intend to sell D. Price falls further after there is a shortage
If the government imposed a price ceiling on soda above this good's current market clearing price, there would be
A. a shortage of soda at the ceiling price. B. an increase in the price of soda. C. a surplus of solda at the ceiling price. D. no change in the price of soda.
The 1990 deficit reduction legislation
A. contained no new taxes. B. increased excise tax rates. C. increased the personal income tax rates by 10%. D. contained no reductions in non-defense spending.