Microeconomic substitution is impossible for the economy as a whole because
a. money is a veil.
b. real GDP measures the total quantity of goods and services produced by all firms in all markets.
c. the prices of some goods and services adjust sluggishly in response to changing economic conditions.
d. a lower price level increases real wealth, which stimulates spending by consumers and vice-versa.
b
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Moving along the potential GDP line, when the price level changes, the
i. real wage rate stays at the full-employment equilibrium level. ii. money wage rate changes by the same percentage. iii. money prices of non-labor resources change by the same percentage. A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
In the specific factors model, a 5% increase in the price of food accompanied by a 0% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________
A) increase by less then 5%; decrease; increase B) increase by 5%; remain unchanged; remain unchanged C) increase by more then 5%; increase; remain unchanged D) remain constant; increase; increase E) remain constant; decrease; decrease
Comparative statics analysis in economics is best illustrated as
A) the comparison of equilibrium points before and after changes in the market have occurred. B) a comparison of two types of markets. C) the comparison of the percentage of change in the one variable divided by the percentage change in the other variable. D) an analytical technique used to show best case scenarios of demand and supply curves.
Which of the following is the most liquid asset?
A) season tickets to the Yankees' games B) the cash that your Aunt Ursula stuffs in her mattress C) a $5,000 6-month certificate of deposit (time deposit) D) one hundred shares of IBM stock