What is the difference between short-run equilibrium and long-run equilibrium in the goods and services market?
Short-run equilibrium occurs at prices where aggregate demand and short-run aggregate supply intersect. Here the aggregate quantity demanded equals the aggregate quantity supplied. An economy can be in short-run equilibrium without being in long-run equilibrium, but if it is in long-run equilibrium, it must also be in short-run equilibrium. Long-run equilibrium occurs when decision makers correctly anticipated prices when their decisions were made. Thus, an economy in short-run equilibrium will also be in long-run equilibrium only if actual prices were correctly anticipated.
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If the quantity of corn is such that the marginal cost of corn is greater than the marginal benefit of corn, then I. there is a deadweight loss. II. more than the efficient quantity of corn is produced
A) Only I is correct. B) Only II is correct. C) Both I and II are correct. D) Neither I nor II is correct.
Monetarists argued that the Fed wasn't serious about adhering to a money-growth target because
A) it was unable to reduce inflation at all. B) it tried to target three different monetary aggregates simultaneously. C) the sacrifice ratio remained too high. D) it gave too much weight to movements in exchange rates.
The Keynesian cross model attributes differences between actual output and planned expenditure to
a) unintended inventory accumulation or depletion b) buffer stocks resulting from risk-averse decision-making regarding production c) taxes d) net exports e) the diminishing marginal product of capital
Which of the following are signals to the owners of scarce resources about the best uses of those resources?
A. Economic indicators B. The accounting cost of those resources C. Government regulations D. Profits of businesses