A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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If the Fed wants to stimulate the economy, ________
A) it reduces money supply B) it lowers spending C) it increases tax rates D) it lowers short-run interest rates
If the equilibrium level of real GDP per year is greater than the full-employment level of GDP, then
A) the economy is at full employment with no price changes. B) the economy expands the level of real GDP. C) an inflationary gap occurs. D) a recessionary gap occurs.
If the Department of Defense hires only volunteers, the armed forces will be staffed predominantly by people who
A) are incompetent. B) are patriotic. C) care principally about money. D) see the armed forces as their best opportunity. E) want to serve more than they want to make money.
Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits
A) equitably B) rationally C) emotionally D) selfishly