When we compare PAE and actual output (Y) the macroeconomic variable we generally use to directly assess their equivalence is:
A. capital expenditure.
B. inventories.
C. unemployment.
D. interest rates.
Answer: B
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To prevent demand-pull inflation,
A) firms must refuse to increase the money wage rate. B) firms must refuse to increase the real wage rate. C) the Fed must not let the quantity of money persistently rise. D) the natural unemployment rate must increase. E) real GDP must increase.
In 2008, the liquidity of mortgage-backed securities declined significantly. Make use of a graph of the bond market to show how this affected the price of mortgage-backed securities
What will be an ideal response?
A merger wave can be set off
a. by government restrictions that prevent firms from reaching their minimum efficient scale b. if the federal government raises corporate income taxes. c. if the federal government lowers corporate income taxes d. if minimum efficient scale falls e. by some change in a market, such as a shift in market demand.
Which of the following most accurately states the function of middlemen?
a. Middlemen add to the expense of buyers and sellers without providing any benefit. b. Our economy would work just as well without middlemen since they do not expand the availability of physical goods. c. Middlemen reduce the number of transactions since they increase the buyer's price and reduce the seller's net revenue. d. Middlemen create value by arranging trades and providing information to buyers and sellers.