Ceteris paribus, if average prices in the U.S. economy fall, then the
A. Interest rate effect will lead to a lower quantity of U.S. output demanded.
B. Foreign trade effect will lead to a higher quantity of U.S. output demanded.
C. Profit effect will lead to a higher quantity of U.S. output demanded.
D. Real balances effect will lead to a lower quantity of U.S. output demanded.
Answer: B
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Explain how incomplete information causes each of the following situations and why the equilibrium in each of these situations is not Pareto optimal:
(i) signaling, (ii) adverse selection, and (iii) moral hazard.
When a country exports more than it imports, the country has ________.
A. an increase in aggregate supply B. a trade deficit C. a decrease in aggregate demand D. a trade surplus
All else constant, as the amount of a firm's implicit costs increases, the difference between economic profit and accounting profit will:
A) increase. B) stay the same. C) decrease. D) cannot be determined without more information.
The Pareto superiority concept _____
a. is equivalent to utilitarianism b. is equivalent to equilibrium in a perfectly competitive market c. compares two different states of the world d. looks at a state of the world and judges its superiority