Refer to Figure 17-1. Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above, and the unemployment rate at A is the natural rate
If the economy was to move to point C, which of the following must be true?
A) Equilibrium GDP at point C must be above potential GDP.
B) The Fed conducted contractionary policy to cause the move.
C) The Fed sold treasury bills to cause the move.
D) The economy is producing a level of GDP equal to potential GDP.
E) Aggregate demand must have decreased.
A
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An economy produces only two goods: paper and scissors. Dyes from paper production pollute a nearby river. Use a production possibilities curve (PPC) to illustrate your explanation of how the unfettered market would fail to provide the efficient mix of paper and scissors.
What will be an ideal response?
Economic freedom is a precondition for economic growth. Which of the following is a characteristic of economic freedom? i. A democratic form of government ii. Property rights must be protected. iii
The government must support and pay for inventions and innovations. A) i only B) ii only C) Both i and ii D) Both ii and iii E) Both i and iii
Suppose sugar and artificial sweeteners are perfect substitutes for Sam. Her indifference curves for those two goods would be
A) downward-sloping and convex to the origin. B) downward-sloping and straight lines. C) L-shaped. D) downward-sloping and concave to the origin.
When a pharmaceutical firm spends millions of dollars to lobby and convince Congress to extend the number of years a firm is awarded patent protection, then the pharmaceutical firm is engaging in:
A. rent seeking. B. fraud. C. price discrimination. D. marginal cost pricing.