If the market price is above the equilibrium price:
a. A surplus will occur and producers will produce less and lower prices
b. Producers will make extremely high profits
c. A surplus will result and consumers will bid prices up
d. A shortage will occur and producers will produce more and lower prices
Answer: a. A surplus will occur and producers will produce less and lower prices
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When Fed policy is being used to offset an inflationary gap, which of the following variables increases as a result? a. Aggregate demand. b. Investment
c. Net Exports. d. Interest rates.
A budget deficit is often accompanied by a(n) __________ deficit.
a. trade b. education c. corporate d. international
To say that government sometimes functions as a "transfer mechanism," means that government sometimes
A) ends up transferring goods to individuals in return for taxes paid. B) ends up transferring negative externalities into positive externalities. C) ends up taking from group X to give to group Y. D) transfers taxes into subsidies. E) none of the above
The graph below depicts a situation where, if the market demand for the product increases, the prices of the resources used by the firms in the industry would:
A. Increase
B. Decrease
C. Stay constant
D. Be set by the government