Total surplus is represented by the area below the
a. demand curve and above the price.
b. price and up to the point of equilibrium.
c. demand curve and above the supply curve, up to the equilibrium quantity.
d. demand curve and above the horizontal axis, up to the equilibrium quantity.
c
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A weakness in the classical economic claim that a recession is caused by a decrease in labor demand curve is
a. that labor demand never changes b. that labor demand increases during a recession c. that labor supply decreases during a recession d. the confusion between a shift of the labor demand curve and a movement along that curve e. the impossibility in the classical model of total spending ever being deficient
Insurance companies charge annual premiums to collect revenue, which they then use to pay customers who file claims for damages they incur. Because of the moral hazard problem insurance companies separate customers into groups. Group 1: customers who file few claims & Group 2: customers that file a lot of claims. After creating these groups, what happens to the average annual premium within a
group? a. Group 1: average annual premium increasesGroup 2: average annual premium increases b. Group 1: average annual premium decreasesGroup 2: average annual premium increases c. Group 1: average annual premium increasesGroup 2: average annual premium decreases d. Group 1: average annual premium decreasesGroup 2: average annual premium decreases
If you earn additional $500 in disposable income one week for painting your neighbor's house
A. the total of your consumption and saving will increase by less than $500. B. the total of your consumption and saving will increase by $500. C. your consumption will increase by more than $500, even if your MPS is 0.1. D. the total of your consumption and saving will increase by more than $500.
In a binding situation, the Fed rule calls for
A. a negative output level. B. a positive interest rate. C. a negative price level. D. a negative interest rate.