The belief by most economists that real and nominal variables are essentially determined separately in the long run is characteristic of the ________ model.
a) aggregate demand
b) classical
c) Keynesian
d) aggregate supply
Answer: b) classical
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Explain how we can estimate the shape of a person's indifference map by observing choices under different economic circumstances. Explain also why we will not be able to identify any non-convexities in tastes from our observations.
What will be an ideal response?
When an economy experiences strong economic growth,
a. the number of families in the bottom 10 percent of the income distribution decreases b. the income of families in the bottom of the income distribution increases c. only the top of the income distribution is affected d. the accompanying inflation cancels out any change in income distribution e. the rich are no better off because taxes rise with income
How does the imposition of an excise tax on a good affect its market equilibrium?
A. Equilibrium quantity increases, and equilibrium price decreases. B. Equilibrium quantity decreases, and equilibrium price increases. C. Equilibrium quantity decreases, and equilibrium price decreases. D. Equilibrium quantity increases, and equilibrium price increases.
A change in economic output is potentially efficient
A. only if no one is made worse off. B. if the value of the resulting gains exceeds the value of the resulting losses. C. if the value of the resulting gains is less than the value of the resulting losses. D. if the value of the resulting gains exactly equals the value of the resulting losses.