To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Among the key ingredients that propelled the American economy to emerge as the leading industrial power by the beginning of World War I were
A. the world's first universal public education system. B. a large agricultural surplus. C. entrepreneurial abilities of great industrialists. D. all of the choices are true.
Cyclical unemployment arises when
A) unskilled or low-skilled workers find it difficult to obtain desirable, long-term jobs. B) labor must be reallocated from industries that are shrinking to areas that are growing. C) workers must search for suitable jobs and firms must search for suitable workers. D) output and employment are below full-employment levels.
When faced with a marginal effluent fee (MEF), each polluting source will
a. abate up to the point where its total abatement cost (TAC) equals the MEF b. abate nothing and pay the MEF on all units of pollution released c. clean up pollution as long as its marginal abatement cost is lower than the MEF d. reduce its effluents to zero to avoid paying the effluent fee
Economist believe that most short-run fluctuations are the result of:
A) Unexpected changes in the availability of imported resources B) Supply shocks C) Demand shocks D) Negative supply shocks