An increase in the growth rate of nominal GDP would be displayed in our model as:
A. a parallel shift of the AD curve outward.
B. the AD curve becoming steeper.
C. a parallel shift of the AD curve inward.
D. the AD curve becoming flatter.
Ans: A. a parallel shift of the AD curve outward.
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Legislation to protect red-cockaded woodpeckers created incentives that resulted in premature harvesting of trees the woodpeckers like to nest in. This is an example of which of the following?
a. Association is not causation. b. the fallacy of composition c. the use of ceteris paribus conditions in economic analysis d. Good intentions do not always lead to desirable outcomes.
During a severe recession, we would expect output to fall the most in:
A. the health care industry. B. the clothing industry. C. agriculture. D. the construction industry.
When the production of a good involves several inputs and inputs are used in fixed proportions, an increase in the cost of one input will usually cause total costs to
A) rise more than in proportion. B) rise less than in proportion. C) remain unchanged. D) rise by the exact amount of the input price increase.
When output increases by 1%, the unemployment rate does not tend to fall by 1% in the short run because
A. as output increases, the size of the labor force increases. B. the number of people who become employed is less than the number of new jobs created. C. a firm is likely to meet some of the increase in output by increasing the number of hours worked per job. D. all of the above.