If the economy has been experiencing high inflation, as it was in the late 1970s, sharply reducing that inflation rate through monetary policy (as Paul Volcker did) may
A. increase demand for expensive items like cars and houses.
B. produce a recession in the short run.
C. increase short-run economic growth, triggering an economic expansion.
D. reduce the unemployment rate in the short run.
Answer: B
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In a market economy, goods are allocated to
A. all potential uses. B. all citizens on an equal basis. C. citizens with political power. D. citizens with both the desire and the willingness to pay for the goods.
The price system takes into account consumer preferences in the distribution of goods and services
a. True b. False Indicate whether the statement is true or false
Which of the following is not an argument made by critics of advertising?
a. Advertising manipulates people's tastes. b. Advertising impedes competition. c. Advertising promotes economies of scale. d. Advertising increases the perception of product differentiation.
Using the production function Real GDP = T (L, K), define the term production function and describe what each of the variables (T, L, and K) represents. When graphed with Real GDP on the vertical axis and labor on the horizontal axis, which variable(s) can shift the production function and which variable(s) can cause a movement along the production function?