When both inflation and unemployment are concerns, supply-side economists argue in favor of policies to shift the
A. aggregate supply curve to the right and lower the CPI, while Keynesian fiscal policy would shift the aggregate demand curve to the right and increase the CPI.
B. aggregate supply curve to the left and raise the CPI, while Keynesian fiscal policy would shift the aggregate demand curve to the left and decrease the CPI.
C. aggregate supply curve to the right and lower the CPI, which is the same policy Keynesian economists would advocate.
D. aggregate demand curve to the right because unemployment is a more important concern than inflation.
Answer: A
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Microeconomics is best described as the study of
A) the choices made by individual households, firms, and governments. B) marginal changes in the economy. C) inflation, unemployment, gross national product, and the nation's economy as a whole. D) how markets interact in the aggregate economy.
Equilibrium expenditure is the level of aggregate expenditure at which
A) aggregate planned expenditure equals real GDP. B) aggregate private expenditure equals real GDP. C) planned inventory investment equals zero. D) aggregate production equals real GDP. E) aggregate actual expenditure equals real GDP.
The negative impact of the loss of value of collateralized assets is due to
A) asymmetric information. B) Ricardian Equivalence. C) limited commitment. D) financial intermediation through banks.
A multiplant monopolist can produce her output in either of two plants. Having sold all of her output she discovers that the marginal cost in plant 1 is $30 while the marginal cost in plant 2 is $20. To maximize profits the firm will
A) produce more output in plant 1 and less in the plant 2. B) do nothing until it acquires more information on revenues. C) produce less output in plant 1 and more in plant 2. D) produce less in both plants until marginal revenue is zero. E) shut down plant 1 and only produce at plant 2 in the future.