According to the aggregate expenditure model, when faced with unwanted inventory, firms
A) do nothing and wait for equilibrium to be restored.
B) are forced to go out of business.
C) immediately cut prices.
D) decrease production.
E) increase production.
D
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If expected inflation rises, the long-run Phillips curve will
A) become negatively sloped. B) shift to the left. C) shift to the right. D) not be affected.
The concerns about world food production raised by Malthus have not materialized because:
A) input prices have fallen over time. B) crop prices have risen over time. C) Malthus was wrong about the diminishing returns to labor in agriculture. D) technological improvements have increased our ability to produce food over time.
Which of the following is true in a perfectly competitive market?
a. The sellers can partially influence the price level in the market. b. All firms have identical costs. c. Entry or exit of new sellers into the market is restricted. d. Buyers and sellers have incomplete information about the product and the market.
Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?
a. Some workers are members in unions. b. Some firms pay efficiency wages; others do not. c. Some customers are discriminatory in their buying habits. d. Some employees have accumulated more human capital than other employees.