If a price floor is set below the current market clearing price, then
A. a surplus must immediately occur.
B. quantity demanded will remain equal to quantity supplied at the current market clearing price.
C. there will be incentives for black markets to develop.
D. a shortage must immediately occur.
Answer: B
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When a lender underestimates the rate of inflation,
a. purchasing power is redistributed to the lender. b. purchasing power is redistributed to the borrower. c. the real rate of interest will be higher than expected. d. the nominal interest rate was set too low.
The long-run aggregate supply curve shifts right if
a. the price level rises. b. the price level falls. c. the capital stock increases. d. the capital stock decreases.
Negative externality occurs when
A. the production of a good harms third parties. B. the production of a good helps third parties. C. the consumption of a good helps third parties. D. a buyer is sold inferior and damaged merchandise.
The labor force participation rate:
A. is used as an indication of the health of the overall economy. B. typically rises during times of recession, as more people need work. C. tells us what fraction of the working-age population wants to be working, whether or not they actually have a job. D. All of these are true.