If an unanticipated decrease in aggregate demand results in an output below the economy's long-run capacity, long-run equilibrium will eventually be restored by
a. an increase in the rate of inflation.
b. lower resource prices and lower real interest rates.
c. higher resource prices and higher real interest rates.
d. a decrease in the natural rate of unemployment.
B
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If the government spending multiplier is 7, the tax multiplier must be
A) -6. B) -3. C) 3. D) 7.
A market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5 . Eleven sellers are also willing to sell at the same prices. How many transactions must the market maker make if he wants to maximize his profits?
a. 1 b. 2 c. 3 d. 4
If the price of a good doubles and quantity supplied triples, then
a. demand is elastic b. demand is inelastic c. supply is inelastic d. supply is elastic e. there is insufficient information to reach any conclusion about the price elasticity of supply
What are the two approaches followed by the U.S. government to ease the burden on the victims of free trade?