Refer to the given figure.
________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________.
A. Falling; B: C
B. Rising; A; C
C. Falling; A; C
D. Rising; A
Answer: C
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Because of the presence of asymmetric information problems in credit markets, an expansionary monetary policy causes a ________ in net worth, which ________ the adverse selection problem, thereby ________ increased lending to finance investment
spending. A) decline; increases; encouraging B) rise; increases; discouraging C) rise; reduces; encouraging D) decline; reduces; discouraging
Suppose that only one curve shifts. If you observe that the equilibrium price increased while the equilibrium quantity decreased, then the market experienced a(n):
A. decrease in supply. B. increase in demand. C. increase in supply. D. decrease in demand.
When the economy goes into a recession and firms require less labor, managers tend to:
A. Reduce wages, to reflect the lower demand for labor B. Avoid cutting wages, for fear of drops in worker-productivity C. Lay off workers, and keep wages of remaining workers constant D. Keep all of their workers, by spreading work more thinly
Most nations do not push the rate of economic growth to the maximum because
a. it would be impossible to do so b. they do not know how to do so c. there is an opportunity cost associated with economic growth d. maximum growth would create an inefficient economy e. government budget deficits prevent them from doing so