If products were in short or surplus supply in the Soviet Union:
A. price and profit signals eliminated those shortages and surpluses.
B. price and profit signals intensified those shortages and surpluses.
C. producers would not react because no price or profit signals occurred.
D. the planners would immediately adjust production to achieve equilibrium.
Answer: C
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An economy is at a short-run equilibrium as illustrated in the above figure. An appropriate fiscal policy option to move the economy to full employment is to
A) lower the interest rate by increasing the quantity of money and move the economy to a full-employment equilibrium at point b. B) increase government expenditure and move the economy to a full-employment equilibrium at point b. C) increase tax rates and move the economy to a full-employment equilibrium at point c. D) increase government expenditure and move the economy to a full-employment equilibrium at point c. E) increase tax rates and move the economy to a full-employment equilibrium at point b.
Marginal cost is defined as the increase in total cost resulting from an increase in
a. one unit of output. b. output of 100 units. c. a firm's plant size. d. one unit of labor.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.
Figure 10-5
In Figure 10-5, which graph best illustrates the situation of an economy reacting to a recessionary gap by reducing resource cost levels?
A. (1) B. (2) C. (3) D. (4)