An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.

A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease


Answer: D

Economics

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If the market for bicycles is efficient, then

A) no more bicycles can be produced. B) marginal benefit exceeds marginal cost. C) consumer surplus must be greater than producer surplus. D) it is not possible to produce more bicycles without sacrificing another, more highly valued good. E) consumer surplus must equal producer surplus.

Economics

Ann Trepreneur was formerly a landlord, renting her building for $1,200 a month. She now uses her building for her own florist shop. Pick the true statement

A) The building costs Ann $1,200 per month. B) Ann incurs no opportunity cost on the building. C) Ann uses the building as a free good. D) None of the above is true.

Economics

If a restaurant like Buffalo Wild Wings has higher costs than a comparable Hooters restaurant, the only way it can have higher profits is if

A) the demand for its food is higher than the demand for food at Hooters. B) it sells the quantity associated with its minimum average total cost. C) it has more locations than Hooters. D) its marginal revenue is lower than the marginal revenue of Hooters.

Economics

Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 

A. D; C B. B; C C. B; A D. D; B

Economics