Potential GDP would decrease if
A. technical progress improves.
B. capital stock increases.
C. the number of hours worked increases.
D. Congress passes a 32-hour work week.
Answer: D
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A mugger steals $25 from John Doe. What can an economist conclude?
A) Nobody gained in the "exchange." B) Both parties gained in the "exchange." C) Only the mugger's wealth has increased. D) Nothing, because economists study strictly voluntary exchanges.
Beginning from the full-employment level of real GDP, an increase in one of the components of the aggregate demand curve will increase the: a. average level of prices (CPI). b. unemployment rate
c. natural level of real GDP. d. level of investment spending. e. level of government spending.
Moral hazard arises when principals find it costly to monitor agents
Indicate whether the statement is true or false
Government failure
A. Results when government intervention fails to improve market outcomes. B. Occurs whenever the government intervenes in the market. C. Occurs whenever there is market failure. D. Does not occur; only market failure occurs.