Which of these is likely to be observed in an economy in which the equilibrium level of real GDP is below potential GDP?
a. Economic growth
b. An increase in gross investment
c. An increase in the general price level
d. An increase in unemployment
d
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Using the concept of income and substitution effects, explain how you might react to each of the following:
(a) You currently work 20 hours a week at $10 per hour and your employer tells you he must reduce your wage to $8 per hour. (b) The price of pizza doubles and the price of hamburgers remains constant.
The above figure shows Bobby's indifference map for juice and snacks. Assuming income remains unchanged, when the budget line rotates out, the expenditure on snacks
A) increases. B) decreases. C) does not change. D) Not enough information
A gas station opened up on the highway in a patch where there are no gas stations close by. It is more likely to be able to set higher prices because
a. the demand for its product is more inelastic due to an unavailability of substitutes b. the demand for its product is more elastic due to an unavailability of substitutes c. the demand for its product is more inelastic due to an availability of substitutes d. the demand for its product is more elastic due to an availability of substitutes
Which of the following is the most likely outcome of raising the minimum wage?
a. an increase in both the quantity of labor supplied by workers and the quantity of labor demanded by firms b. an increase in the quantity of labor supplied by workers and a decrease in the quantity of labor demanded by firms c. a decrease in the quantity of labor supplied by workers and an increase in the quantity of labor demanded by firms d. a decrease in both the quantity of labor supplied by workers and the quantity of labor demanded by firms