When a profit-maximizing firm in a competitive market experiences rising prices, it will respond with an increase in production
a. True
b. False
Indicate whether the statement is true or false
True
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The absence of cyclical unemployment means the economy is at the natural unemployment rate
Indicate whether the statement is true or false
All of the following are likely results of a negative demand shock EXCEPT
A) a negative output gap. B) lower inflation. C) IS shifts to the left. D) Phillips curve shifts to the left.
Because of a late night out with friends, Ayana decided to sleep in rather than attend her 8 a.m. economics class. According to economic analysis, her choice was
a. irrational, because economic analysis suggests you should always attend classes that you have already paid for. b. irrational, because oversleeping is not in Ayana's self-interest. c. rational only if Ayana has not missed any other classes. d. rational if Ayana values sleep more highly than the benefit she expects to receive from attending the class.
The convergence hypothesis states that international differences in real GDP per capita tend to _____ over time.
A. diverge B. fluctuate C. remain constant D. narrow