Assuming a long-run aggregate supply curve, a decrease in government spending results in ________ in output and ________ in price level.
A. no change; an increase
B. no change; a decrease
C. a decrease; a decrease
D. an increase; no change
Answer: B
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Profits resulting from luck can be distinguished from profits attributable to shrewd predictions by
A) calculating the opportunity cost of earning the profits. B) comparing the profits with interest rates. C) finding out whether they lead to reduced revenue or increased costs. D) no known empirical test. E) whether or not they were generally anticipated.
The concept of economic efficiency refers to the size of the “economic pie” whereas the concept of equality refers to how the “pie” is distributed.
Answer the following statement true (T) or false (F)
Cost minimization suggests that two inputs should be employed to the point where
A. the marginal cost of each input is identical. B. the extra contribution to physical output of the inputs is identical. C. the marginal product per dollar spent on each input is identical. D. the marginal revenue product of each input is identical.
Suppose a new government policy will generate $5,000 of benefits for local businesses and $3,000 of costs. This policy can best be described as
A. inefficient. B. Pareto efficient. C. equitable. D. potentially efficient.