Refer to the accompanying figure.
Starting from long-run equilibrium at point C, a favorable inflation shock that decreases inflation from ? to ?1 will lead to a short-run equilibrium at point ________ creating ________ gap.
A. B; expansionary
B. B; recessionary
C. A; a recessionary
D. A; an expansionary
Answer: D
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Suppose the price of beans rises from $1.00 a pound to $2.00 a pound, quantity demanded falls from 10 units to 6 units. In this example, the demand for beans is said to be
A) relatively elastic. B) relatively inelastic. C) perfectly elastic. D) perfectly inelastic.
Which of the following statements is TRUE regarding the textbook used in this course?
A) The textbook presents only economic theory, so no value judgments are involved in the text. B) The textbook does not include normative statements. C) The microeconomic section of the book includes only positive analysis while the macroeconomic section includes normative analysis. D) The selection of topics included in the book involves value judgments as well as economic theory.
Imposing a unit excise tax on the final sale of a good or service can be displayed graphically as
A. a vertical shift downward of the demand curve. B. a vertical shift upward of the demand curve. C. a vertical shift upward of the supply curve. D. a vertical shift downward of the supply curve.
The variance of a portfolio containing n assets with independent returns:
A. increases as n increases. B. decreases as n increases. C. does not change in a predictable way when n increases. D. is constant for any n greater than two.