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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Laura Spears is a public school teacher. She produces a(n)
a. merit good b. transfer payment to children c. public good d. nonexcludable good e. entitlement
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and GDP Price Index rises. b. The real risk-free interest rate and GDP Price Index remain the same. c. The real risk-free interest rate falls, and GDP Price Index falls. d. There is not enough information to determine what happens to these two macroeconomic variables. e. The real risk-free interest rate rises, and GDP Price Index falls.
If there is 2 percent frictional unemployment, 3 percent structural unemployment, and 1 percent cyclical unemployment, then the natural rate of unemployment equals:
A. 3%. B. 6%. C. 4%. D. 5%.
Why are most flat tax proposals actually calling for a progressive tax?
a. Lower levels of income are exempted. b. All income is taxed equally. c. Higher levels of income are exempted. d. The filing process is simple and quick.