List and briefly explain each of the four properties of indifference curves
1: Higher indifference curves are preferred to lower ones, because consumers usually prefer more of something to less of it. 2: Indifference curves are downward sloping. The slope of an indifference curve reflects the rate at which the consumer is willing to substitute one good for another while holding utility constant. If the quantity of one good is reduced, the quantity of the other good must increase in order for the consumer to be equally happy. 3: Indifference curves do not cross. If indifference curves did cross, the same point could be on two different curves, thus contradicting the assumption that consumers prefer more of both goods to less. 4: Indifference curves are bowed inward. This is because people are more willing to trade away goods that they have in abundance and less willing to trade away goods of which they have less.
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The long-run aggregate supply curve will shift to the right if
A) net exports decrease. B) the economy experiences technological change. C) there is a decrease in population. D) the economy experiences high levels of inflation.
Suppose that the firms in an oligopolistic industry successfully collude. What will be the outcome? Explain
What will be an ideal response?
If the expected inflation rate is unchanged, a fall in the natural rate of unemployment would
A) shift the short-run Phillips curve to the right. B) not shift the short-run Phillips curve. C) shift the short-run Phillips curve to the left. D) shift the short-run Phillips curve to the left and shift the long-run Phillips curve to the right.
Supply-side economics concentrates on the benefits of reducing marginal tax rates. Describe three ways that high marginal tax rates are likely to retard output growth