Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y1.
C. P3 and Y1.
D. P3 and Y2.
Answer: D
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Because collective action problems are ________ to solve, society often ________
A) relatively easy; handles the problems itself B) relatively easy; ignores the problems C) impossible; chooses to live with the problems D) difficult; requests help from the government
Which of the following describes the infant industry argument for protectionism?
A) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. B) Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. C) An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition. D) Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies.
One reason why, in the short run, the marginal product of labor might increase initially as more workers are hired is that
A) beyond some point, a firm has hired too many workers. B) specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. C) the best workers are hired first and later hires are not as skillful. D) the first workers hired get to use the best equipment.
When there is economy-wide equilibrium, there is a tendency for
A) total output to rise. B) total output to fall. C) total output to remain unchanged. D) prices to fall. E) prices to rise.