In Figure 1 above if the economy were at Y3 then we would expect there to be:
A. a decrease in production since PAE < actual output.
B. an increase in production since PAE < actual output.
C. an increase in production since PAE > actual output.
D. no change in production since PAE = actual output.
Answer: A
You might also like to view...
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Given a typical demand curve and a decline in price, the consumer who wishes to maximize total utility must increase the quantity purchased of a good to arrive at an optimal MU = P point.
Answer the following statement true (T) or false (F)
Taxes and in-kind transfers make the distribution of income more unequal
a. True b. False
The individual who brings together economic resources and assumes the risk in a capitalist economy is called the:
A. stockbroker. B. banker. C. manager. D. entrepreneur.