To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Which of the following is the largest source of revenue for the federal government?
a. corporate income tax b. payroll tax c. personal income tax d. user charges
For which pairs of goods is the cross-price elasticity most likely to be negative?
a. peanut butter and jelly b. celery and coffee c. pens and pencils d. iPods and iPads
The production possibilities frontier illustrates
a. the combinations of output that an economy should produce. b. the combinations of output that an economy should consume. c. the combinations of output that an economy can produce. d. All of the above are correct.
In calculating the Consumer Price Index
A. the price of each item is allowed to change between the base period and current year but the quantity is held constant. B. the quantity of each item is allowed to change between the base period and current year but the price is held constant. C. both the price and quantity of each item is allowed to change between the base period and current year. D. neither price nor quantity of each item is allowed to change between the base period and current year.