Suppose a perfectly competitive market is in long-run equilibrium and then there is a permanent increase in the demand for that product. The new long-run equilibrium will have
A) fewer firms in the market.
B) more firms in the market.
C) the same number of firms in the market.
D) probably a different number of firms, but it is not possible to determine if there will be more or fewer firms.
E) a permanent decrease in supply.
B
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A consumer's real disposable income equals
A) wage income plus consumption expenditures. B) wage income plus profit income minus taxes. C) total income minus profit income minus taxes. D) total income minus wage income minus taxes.
A motorist who chooses high-deductible versus low-deductible car insurance is signaling that he is:
A. a safe driver. B. a reckless driver. C. likely to be a low income earner. D. likely to not pay.
Relating to the Economics in Practice on page 357: A long-term study of Huntington's disease patients found that individuals who carry the Huntington's disease genetic mutation are up to five times as likely as the general population to buy long-term care insurance. This is an example of ________ in the health insurance market.
A. market signaling B. moral hazard C. adverse selection D. risk-loving
Describe the Taylor rule. If the Fed were following the rule, what would the nominal Fed funds rate be if inflation over the past year were 4% and output were 1% below its full-employment level?
What will be an ideal response?