Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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Refer to Figure 10.3. A positive demand shock with no change in the real interest rate is best represented by ________ in panel (a) and ________ in panel (b)
A) a shift from AE3 to AE2; a shift from IS2 to IS1 B) a shift from AE2 to AE3; a shift from IS1 to IS2 C) a shift from AE1 to AE2; a movement from point A to point B D) a shift from AE1 to AE3; a movement from point A to point C
The least liquid of the assets listed below is:
a. real estate b. currency. c. traveler's checks. d. oil. e. checkable deposits.
In both perfect competition and monopoly, a firm: a. maximizes profit by equating marginal revenue to marginal cost
b. will shut down in the short run if price is less than average variable cost. c. will always earn a zero economic profit. d. will be characterized by both (a) and (b).
During recessions, output
a. and unemployment both fall b. and unemployment both rise c. rises, but unemployment falls d. falls, but unemployment rises e. rises and unemployment remains constant.