A vertical line showing the economy's potential is called the:
A. aggregate demand curve.
B. long-run aggregate supply line.
C. short-run aggregate supply line.
D. short-run equilibrium output line.
Answer: B
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Which of the following is true? i) A rational choice is made on the margin. ii) Microeconomics is the study of the national economy while macroeconomics is the study of the global economy. iii) Economists try to understand how the economic world works by testing normative statements.
A. Only ii B. i and ii C. Only iii D. i and iii E. Only i
If bargaining is costless, the assignment of property rights for an externality
a. has no impact on the possibility of an efficient outcome and no distributional impact. b. has no impact on the possibility of an efficient outcome but does have a distributional impact. c. does have an impact on the possibility of an efficient outcome but has no distributional impact. d. does have an impact on the possibility of an efficient outcome and does have a distributional impact.
Which of the following is not an example of a group responding to an incentive?
a. Students attend class because of an attendance policy that reduces their grade for absences. b. Consumers buy more of a product when it is on sale at a reduced price. c. Universities offer fewer online classes when they generate more revenue than traditional classes. d. Employees work harder to earn higher commissions.
For Meg, the substitution effect of an interest-rate increase is stronger than the income effect. In response to a higher interest rate, will Meg save more or will she save less?