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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If a nation can produce a good or service at the lowest opportunity cost, then it
A) might export or import the good, depending on whether or not it has a comparative advantage in the production of the good. B) can sell the product at a lower price than other nations. C) will definitely import the good because it can beat other countries' prices. D) does not want to export the good because the low cost means it makes only a low profit. E) is best for the nation to not trade the good internationally.
Refer to the given figure.
Based on the diagram, the nominal interest rate equals ________ and the money supply equals ________.
A. 1 percent; 500 B. 5 percent; 500 C. 7 percent; 300 D. 3 percent; 700
________: a market structure that has only one firm buying from sellers
Fill in the blank(s) with correct word
Consider a simple exchange economy where the marginal rate of transformation between two goods is greater than the marginal rate of substitution for the same goods. Can Pareto equilibrium be derived?
What will be an ideal response?