If the economy is represented in the graph shown and is currently at point E1, what could be said about the state of the economy?
A. The unemployment rate is zero.
B. There is higher unemployment than the natural rate.
C. The unemployment rate is just about the natural rate.
D. There is lower unemployment than the natural rate.
Answer: C
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The household budget constraint may have a kink because
A) there is uncertainty. B) households prefer diversity. C) households may substitute consumption for leisure, or the reverse. D) leisure is limited by the number of available hours.
One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money. B. by increasing government spending. C. by setting price ceilings on most goods so people can afford them. D. None of these will help an economy in recession.
A shift away from expenditures on domestic goods and a shift toward expenditures on foreign goods when the domestic price level increases is known as
A) the interest rate effect. B) demand side inflation. C) the real-balance effect. D) the open economy effect.
What is a firm's fundamental goal and what happens if the firm doesn't pursue this goal?
What will be an ideal response?