After a small hurricane in Florida, unemployment is low as there is a great deal of construction work and businesses run at full capacity. This suggests that
A) the economy is operating above the full-employment level and will eventually adjust back to long-run aggregate supply.
B) living standards are falling as employment and economic activity are too high.
C) the economy is operating below its long-run level and living standards are less than they would have been without the hurricane.
D) the hurricane is beneficial since it is increasing employment and replacing less efficient capital with newer and more efficient capital.
A
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A family's summer house on Cape Cod pays a return in the form of
A) interest rate. B) capital gains. C) the pleasure of vacations at the beach. D) stock options. E) capital gains and pleasure.
If government spending increased by $200 billion and the MPC within the economy was 0.9, what would be the total impact on real GDP?
a. $180 billion increase b. $222 billion increase c. $380 billion increase d. $2.0 trillion increase
Macroeconomics focuses on the economy as a whole
a. True b. False
A picture-frame company operates in a monopolistically competitive market. Its short- run equilibrium price is $80 and its ATC is $65 . It sells 100 picture frames a week. Ignoring for now its long-run position, in the short run,
a. the firm makes zero economic profit, zero accounting profit, but $1,500 normal profit b. other picture-frame companies will leave the market because it knows new firms will enter to drive price and economic profit down c. the firm makes an $80,000 accounting profit d. the firm makes an economic profit of $1,500 e. the market demand curve will shift to the left as more firms enter the market