A situation in which output decreases while prices increase is often referred to as:
A. inflation.
B. negative economic growth.
C. a recession.
D. stagflation.
Answer: D
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The figure above shows the supply curve for soda. The market price is $1.00 per soda. The producer surplus from the 20,000th soda is
A) $0.00. B) $0.50. C) $1.00. D) more than $1.00. E) None of the above answers is correct.
Fill in the blank: Demanded services are ________ services
A) instructive B) deductive C) productive D) inductive
Suppose the demand for a good is currently unit elastic over the relevant range. Then the producer of a substitute good goes out of business and stops producing it. As a result, demand over that range is now likely to be a. Unit elastic
b. Relatively elastic. c. Relatively inelastic. d. Perfectly inelastic.
What is the main difference in the classical model as compared to the short-run macro model?
a. In the classical model the economy automatically operates at potential GDP while in the short run model the economy can operate at a different level of GDP b. In the short run model the economy automatically operates at potential GDP while in the classical model the economy can operate at a different level of GDP c. Fiscal policy has no effect in the short run model but is very effective in the classical model d. There is no difference in the predictions of the two models e. The classical model does a better job in predicting recessions than the short-run macro model