The value of an item expressed in purchasing power that varies with the overall price level is known as
A. the real value.
B. deflation.
C. inflation.
D. the nominal value.
Answer: A
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Drug-interdiction policies that reduce the supply of illegal drugs
a. are likely to be more effective in the short run than in the long run. b. are proven to reduce illegal drug use faster than drug-education programs designed to reduce demand. c. may increase drug-related crimes. d. All of the above are correct.
Since restored historic buildings convey a positive externality, local governments may choose to
a. regulate the demolition of them. b. provide tax breaks to owners who restore them. c. increase property taxes in historic areas. d. Both a and b are correct.
Figure 10-17
Suppose an economy is currently operating at output Y1 associated with AD1 and SRAS1, shown in . Initially, the output of this economy is
a.
above its potential, and the rate of unemployment is greater than the natural rate.
b.
below its potential, and the rate of unemployment is greater than the natural rate.
c.
above its potential, and the rate of unemployment is less than the natural rate.
d.
below its potential, and the rate of unemployment is less than the natural rate.
Prices below the free market equilibrium price are inefficient because:
A. they prevent mutually beneficial transactions. B. no one can be made better off without hurting someone by participating in another transaction. C. all mutually beneficial transactions happen. D. more goods could be produced using society's resources.