If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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Under a production quota policy, the government can maintain a particular support price by reducing the quantity supplied. To maintain a particular support price, how must the quota amount change if the demand curve becomes more elastic?
A) Quota amount increases B) Quota amount decreases C) Quota amount does not change D) Quota amount depends on the supply curve
Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that
a. real GDP and the price level are lower in country B. b. real GDP, but not the price level, is lower in country B. c. the price level, but not real GDP is lower in country B. d. neither the price level or real GDP is lower in country B.
According to Okun's law, when cyclical unemployment is positive, the output gap:
A. equals zero. B. is positive. C. equals the rate of cyclical unemployment. D. is negative.
If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is ________ and the elasticity of supply is ________
A) inelastic; 0.5 B) inelastic; 2.0 C) elastic; 0.5 D) elastic; 2.0