If the Naval Research Laboratory fired a chemist and the Environmental Protection Agency hired her at the same salary, the net effect of these events would cause _____ in aggregate demand
a. an increase
b. an increase
c. a decrease
d. a decrease
e. no change
e
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
U.S. Gross Domestic Product (GDP) does NOT include which of the following?
A) the value of goods produced in a foreign country by U.S. owned firms B) the purchase of all final goods and services by U.S. households C) U.S. exports to other countries D) business investment in the United States
The income effect of an increase in the price of salmon
A) refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant. B) is the change in the demand for salmon when income increases. C) refers to the relative price effect—salmon is more expensive compared to other types of fish—which causes the consumer to buy less salmon. D) is the change in the demand for other types of fish, say trout, that results from a decrease in purchasing power.
Some markets fail to generate an optimal quantity of public goods because
a. free riders undermine the profitability of producing the goods b. they are too expensive c. they yield too few benefits d. private enterprise cannot get access to the raw materials e. there is insufficient demand for such goods