A recessionary gap occurs when
A) aggregate demand falls, but other things remain constant.
B) the short-run equilibrium level of real GDP is less than the level consistent with the long-run aggregate supply curve.
C) the short-run equilibrium level of real GDP is greater than the level consistent with the long-run aggregate supply curve.
D) short-run aggregate supply falls, but other things remain constant.
B
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Giffen goods are
a. normal goods for which the income effect dominates the substitution effect. b. normal goods for which the substitution effect dominates the income effect. c. inferior goods for which the income effect dominates the substitution effect. d. inferior goods for which the substitution effect dominates the income effect.
While waiting in line to buy two tacos at 75 cents each and a medium drink for 80 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Jordan, the marginal cost of purchasing the third taco would be
a. zero. b. 20 cents. c. 75 cents. d. 80 cents.
The table below shows cost data for a perfectly competitive firm.OutputAverage Variable CostAverage Total CostMarginal Cost0---22.5027.502.542.0014.501.562.0010.332.082.138.382.5102.307.303.0122.506.673.5143.006.576.0164.007.1311.0The firm will produce output in the short run only if the market price is at least equal to
A. $6.00. B. $3.00. C. $2.00. D. $3.50.
The idea that policy actions have no real effects in the short run if they are anticipated and no real effects in the long run is called the
A. adaptive proposition. B. money illusion proposition. C. Keynesian proposition. D. policy irrelevance proposition.