In the mid-to-late 1990s, changes in the health care industry, substantially reduced health care costs relative to other goods and services. Which of the following is an appropriate description of the mechanism behind this supply shock?
A) The AS curve likely shifted to the right which likely explains the short-run fall in unemployment.
B) The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s.
C) A positive output gap would have resulted in the short-run but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s.
D) all of the above
E) none of the above
D
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Which of the following statements best explains why long-run average cost is never greater than short-run average cost?
A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run. B) In the long run, diseconomies of scale might not occur, but in the short run diminishing marginal returns do. C) In the long run, the cost of capital declines because the firm is able to pay down some of its debts. D) In the long run, the average cost curve need not be U-shaped, but in the short run it is.
For a monopolist, the quantity effect:
A. is the decrease in revenues from selling a greater quantity at a lower price. B. is the increase in revenues from selling a greater quantity at a lower price. C. is always outweighed by the price effect. D. always outweighs the price effect.
Which of the following will cause an increase in output per worker in the long run?
A) an increase in the saving rate B) a reduction in the depreciation rate C) an increase in the stock of human capital D) all of the above
Ceteris paribus, a real depreciation of the dollar will decrease net exports in the United States
Indicate whether the statement is true or false