Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting downward
C. Aggregate demand shifting rightward
D. Aggregate demand shifting leftward
Answer: B
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Suppose the working-age population is 150 million, the labor force is 125 million, and employment is 120 million
a. What is the unemployment rate? b. Now suppose that 2 million students graduate from college and begin to look for jobs. What is the new unemployment rate if none of the students have found jobs yet? c. Suppose that all 2 million students find jobs. What is the unemployment rate now?
When the Fed sells bonds on a mass scale
A) bonds go to the Fed, and dollars go into the banking system, so the money supply tends to rise. B) bonds go to the Fed, and dollars exit the banking system, so the money supply tends to fall. C) banks have fewer bonds and more dollars, so the money supply tends to rise. D) banks have more bonds and fewer dollars, so the money supply tends to fall.
In 2006, hurricanes damaged many parts of Texas, destroying homes, businesses, schools, and infrastructure. In strictly economic terminology, these hurricanes are said to have caused
A) scarcity, because the damages made food and shelter scarce. B) scarcity, because some goods were difficult to get. C) shortages, because supplies were cut off and goods were destroyed. D) tradeoffs, because some areas of the country were damaged when others were not.
Taxes cause deadweight losses because they
a. lead to losses in surplus for consumers and for producers that, when taken together, exceed tax revenue collected by the government. b. distort incentives to both buyers and sellers. c. prevent buyers and sellers from realizing some of the gains from trade. d. All of the above are correct.