Another term for the real-balance effect is
A) the substitution effect.
B) the wealth effect.
C) the indirect effect.
D) the interest rate effect.
B
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The SAS curve and the LAS curve
A) intersect at potential GDP. B) are parallel at potential GDP. C) are perpendicular to one another at potential GDP. D) None of the above answers is correct.
Comparative advantage is the ability to produce:
A. more of a good than others with a given amount of resources. B. relatively more than any other good with a given amount of resources. C. a good or service at a lower opportunity cost than others. D. more of a good at a lower cost.
When the government sets a price floor which is below the equilibrium price
A) a surplus will develop. B) a shortage will develop. C) the equilibrium price will be maintained. D) a price ceiling will follow.
Logging companies are always more profitable if they are able to harvest more (rather than less) lumber in a month. If you concluded from that fact that the logging industry is more profitable if all of the firms in the industry harvest more, then you would be
A. wrong because causation and correlation are not the same. B. right. C. wrong because firms operate on jealousy. D. wrong and have fallen victim to the fallacy of composition.