Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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In general but not always, economic growth:
A. causes economic development, but development does not cause growth. B. does not cause economic development, but development causes growth. C. does not cause economic development, and development does not cause growth. D. causes economic development, and development causes growth.
High barriers to entry protect the market power of existing firms and discourage the formation of firms which:
a. invest heavily in research and development activities. b. use illegal procedures to capture the market. c. are inefficiently small and cannot realize economies of scale. d. are large enough to dominate the existing firms.
In a market economy, goods are allocated to
a. all potential uses. b. all citizens on an equal basis. c. citizens with political power. d. citizens with both the desire and the willingness to pay for the goods.
Exhibit 2-2 Production possibilities curve
In Exhibit 2-2, the slope of the production possibilities curve indicates that the opportunity cost of:
A. coffee is constant. B. coffee is increasing. C. coffee is decreasing. D. corn is increasing.