Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland. We would expect to observe
A. a decrease in aggregate supply and an increase in aggregate demand.
B. a decrease in both real output and the natural rate of unemployment.
C. a decrease in real output and an increase in the price level.
D. a decrease in real output and an increase in the natural rate of unemployment.
Answer: C
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Nominal monthly wages increase from $1,500 to $1,800 while the price of a car increases by 4%. The percentage change in real monthly wages (in terms of cars) is about
A. 14% B. 12% C. 10% D. 16%
Subsidies ________ the price paid by the buyer and ________ the price received by the seller
A) increase, increase B) increase, decrease C) decrease, increase D) decrease, decrease E) do not change; increase
Consider the budget line in the above figure. If the consumer's income is $240, then the price of a movie is
A) $24 per movie. B) $12 per movie. C) $10 per movie. D) More information is needed to determine the price of a movie.
Two candidates are running for election as mayors of New York City that was recently impacted by Superstorm Sandy. In their election platforms, both candidates supported spending very similar amounts on hurricane protection
This similarity is most likely the result of A) both candidates necessarily having the same preferences towards risk and protection. B) the Principle of Minimum Differentiation. C) both the candidates realize that hurricane protection is a public good. D) politicians only take efficiency into account and hence all candidates will suggest the efficient outcome.