During a recession, the actual rate of unemployment will be
a. less than the natural rate of unemployment.
b. greater than the natural rate of unemployment.
c. equal to the natural rate of unemployment.
d. unaffected by the economic contraction.
B
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Figure 9.1 shows three aggregate demand curves. A movement from point b to point a could be caused by a(n)
A) increase in government spending. B) decrease in the money supply. C) increase in taxes. D) increase in the price level.
Government regulations requiring firms that desire to sell securities in financial markets to disclose all available information
A) eliminate the adverse selection problem (when rigorously enforced). B) increase the difficulty that young firms may have in raising funds. C) eliminate the moral hazard problem in securities markets. D) fail to eliminate the adverse selection problem, in part because they do not greatly reduce the difficulty that young firms have in raising funds.
Suppose two economists agree about who would be helped or hurt by certain legislation, but disagree about whether the legislation would be a good idea. These disagreements
a. are positive in nature b. are minor and rarely lead to different policies or conclusions c. are normative in nature d. occur as the result of a mistake made by an economist e. occur because economic models are more complex, and subject to error, than the real world
__________________ states that price and quantity demanded are inversely related.
A. The law of supply B. Market equilibrium C. The law of demand