Which of the following macroeconomic variables would be drawn accurately as perfectly inelastic?
A. Aggregate demand
B. Long-run aggregate supply
C. Short-run aggregate supply
D. None of these should be drawn as perfectly inelastic.
Answer: B
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Referring to a production possibilities curve and the goods being compared, depict the economic event. Suppose the United States was at full employment in 2003 just before invading Iraq. Although the war was won quickly, winning the peace took a decade (guns vs. butter).
A. A movement from a point on or near the curve to a point inside the curve B. A shift in the entire curve to the right (outward) C. A shift in the entire curve to the left (inward) D. A movement along the curve
The downside to targeting specific activities rather than the externality itself is:
A. it risks misaligning the incentives that producers and consumers face with the goal of minimizing the externality. B. it requires a number of different activities to be identified and several different policies to be written, which can be cumbersome and difficult to manage. C. any one activity is likely to not make a significant difference in the presence of an externality. D. All of these statements are true.
If the public decides to hold less currency and more deposits in banks, bank reserves
a. decrease and the money supply eventually decreases. b. decrease but the money supply does not change. c. increase and the money supply eventually increases. d. increase but the money supply does not change.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline