Assume an economy moves from E1 to e2 to E3. Which of the following statements accurately describes the situation shown?
a. The economy recovers from the recessionary gap by moving from E1 to e2.
b. The economy begins and ends in both short-run and long-run equilibrium.
c. The economy recovers from the recessionary gap by moving from E3 to e2.
d. The economy begins in long-run equilibrium but ends in a recessionary gap.
b. The economy begins and ends in both short-run and long-run equilibrium.
You might also like to view...
Increased liquidity in the banking system occurs when ________
A) people buy more bonds B) the demand for real money balances declines C) banks buy more bonds from the central bank D) all of the above E) none of the above
In the food and kindred products industry, it is estimated that the elasticity of output with respect to labor is 0.43 and the elasticity of output with respect to capital is 0.48
These two measures indicate that the primary metals industry is characterized by A) decreasing returns to scale. B) constant returns to scale. C) increasing returns to scale. D) no returns to scale.
Corporate profits are
A) taxed at too low a rate. B) taxed only when a stockholder sells his or her shares of stock. C) taxed twice—once by the corporate tax system, and again by personal tax system when they are paid to stockholders as dividends. D) taxed three times—once by the corporate tax system, again by the personal tax system, and again as capital gains.
The following is an example of risk aversion
a. those applying for a well-paid job tend to be the most qualified b. more reckless drivers opt for cars with fewer safety devices c. the contractor with the lowest bid for a is under-qualified d. Initial Public Offerings (IPOs) seek investors when prospects look good