Suppose the current situation is such that the price level is 120, real GDP is $17 trillion, and GDP along the long-run aggregate supply curve is $16.6 trillion. What will take place to restore the long-run equilibrium?
A) The price level will fall until long-run aggregate supply increases to $17 trillion.
B) The price level will fall and money wage rates will rise until real GDP along the long-run aggregate supply curve is $17 trillion.
C) Money wage rates will rise until real GDP reaches $16.6 trillion.
D) Aggregate demand will increase until both short-run and long-run aggregate supply equal $17 trillion.
C
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Wilbur Rickhiser, a financial advisor, recently told one of his clients: "The biggest mistake you can make is to hold onto a stock for too long in order to avoid a loss
Let's say you bought a stock for $50 per share but that six months later the price fell to $40 after a poor earnings report. Many of my clients in this situation will hold the stock, hoping the price will later rise above $50. In most cases like this the price does not rise and may even fall. You must know when to cut your losses." Which of the following is the best explanation for Rickhiser's advice? A) People sometimes make mistakes when they buy stocks or when they buy goods and services: they ignore the monetary opportunity costs of their choices. B) People sometimes buy stocks because other people are buying them or they want to appear to be fashionable. C) People sometimes make mistakes when they buy stocks because of the endowment effect. D) People often fail to ignore the sunk costs of their decisions. The cost of the stock bought at $50 per share is a sunk cost.
Answer the following statement(s) true (T) or false (F)
1. Microeconomics is the study of the behavior of the overall economies of small countries. 2. Macroeconomics is the study of how certain occurrences affect the economy as a whole. 3. The supply of services is not part of the study of economies because it does not involve the exchange of goods. 4. Economics is the study of how goods and services are exchanged between individuals, businesses, and governments. 5. Traditional economies are the most common economies found in the world today.
Which of the following equations would indicate income elasticity of demand?
a. +20% × +10% = +200 b. +20% + +10% = +30 c. +20% ¸ +10% = +2 d. +20% – +10% = +10
What has been the recent view of antitrust laws?
What will be an ideal response?