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.
Answer: D
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If fiscal policy implementation causes some crowding out, the ________ shift of the aggregate demand curve will be ________ than it would have been if no crowding out had occurred.
A. leftward; larger B. rightward; smaller C. rightward; larger D. leftward; smaller
Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in France is
A) 2 gallons of wine. B) 3 gallons of wine. C) 0.5 gallons of wine. D) 0.33 gallons of wine.
In real-world markets
a. economic efficiency is rare because making voluntary transactions is difficult b. economic efficiency is rare because Pareto improvements are difficult to make c. economic efficiency is best thought of as a continuum d. perfect competition is an impediment to economic efficiency e. every possible Pareto improvement is exploited
When a firm hires a worker for one hour, the marginal cost to that firm equals the:
A. hourly wage of that worker. B. diminishing marginal productivity of that worker. C. price of each item that the worker produces in that hour. D. average total cost of production at the quantity produced.