A bubble happens when:
A. asset prices rise for a long time, even during a recession.
B. asset prices rise higher and faster than can be explained by the fundamentals.
C. asset prices rise faster than can be tracked with traditional statistical tools.
D. asset prices rise higher than experts have predicted they would.
Ans: B. asset prices rise higher and faster than can be explained by the fundamentals.
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According to the Phillips Curve, which of the following may have taken place if both the unemployment rate and inflation have risen?
A) a negative supply shock B) an increase in expected inflation C) a severe recession D) a negative demand shock
Unemployment, at the aggregate level.,
A) is avoidable. B) is part of a well-functioning economy. C) is always a sign of market failure. D) would not happen with good policy.
In a frictionless world
A) Fully funded social security must necessarily make everyone better off, as it provides for retirement. B) Fully-funded social security is a constraint on private saving behavior, and therefore cannot make anyone better off. C) Fully funded social security is always preferred to pay-as-you-go social security. D) Fully funded social security is more efficient, because it is a private program instead of a government program.
When the average product is decreasing, marginal product
A) equals average product. B) is increasing. C) exceeds average product. D) is decreasing. E) is less than average product.