Recent research by Keynesians and classicals has led to
A. convincing evidence that TFP shocks are the dominant force affecting the business cycle.
B. the recognition by classical economists that prices adjust very slowly.
C. the refutation of the efficiency wage model.
D. a reconciliation of the types of models they use.
Answer: D
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If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would
A) decrease. B) remain the same. C) equal 20%. D) increase.
A market for pollution permits can efficiently allocate the right to pollute by using the forces of supply and demand
a. True b. False Indicate whether the statement is true or false
When an economic event causes demand or supply to shift, prices and quantities set off in the general direction of:
a. equilibrium. b. disequilibrium. c. stabilization. d. maximization.
Suppose that Dianne Lindsay spends all her income on two goods, A and B, in a manner in which their marginal utility to price ratios are equal, i.e., MUa/Pa = MUb/Pb. If at that time the price of A is higher than the price of B, then she
a. should increase her consumption of A and decrease her consumption of B because the marginal utility of A is higher b. is already maximizing her total utility and should make no change c. should increase the consumption of B and decrease the consumption of A because the price of B is lower d. should increase the consumption of both A and B since the ratios are equal e. has made an irrational choice