When productive activities are organized according to the principle of the division of labor
A) scarcity is eliminated.
B) we do not devote enough resources for capital investment.
C) total output increases due to the advantages of specialization.
D) an inefficient outcome results.
Answer: C
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Because new plastic and recycled plastic are substitutes, as the price of newly produced plastic decreases
A) the demand curve for recycled plastic shifts to the left. B) there is a movement up along the demand curve for recycled plastic. C) there is a movement down along the demand curve for recycled plastic. D) the demand curve for recycled plastic shifts to the right.
Between World War II and the 1970s, three firms—General Motors, Chrysler, and Ford—produced and sold nearly all the output of the U.S. auto industry. These three firms had
A) an oligopoly. B) monopolistic competition. C) colluded. D) a pure monopoly.
According to the Ricardian equivalence theorem, budget deficits resulting from tax cuts
A) increase aggregate demand. B) decrease aggregate demand. C) have no effect on aggregate demand. D) affect only aggregate supply.