Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland. We would expect to observe
A) a decrease in aggregate supply and an increase in aggregate demand.
B) a decrease in both real output and the natural rate of unemployment.
C) a decrease in real output and an increase in the natural rate of unemployment.
D) a decrease in real output and an increase in the price level.
D
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One result of asymmetric information in the market for bank loans is that
a. few loans are offered b. few bad loans are made c. more bad loans than good loans may be made d. lenders benefit at the expense of borrowers e. the interest on good loans will be higher than otherwise
If capital deepening increases from $100 to $150 and this increase results in worker's productivity increasing from $60 to $70, and if there were 100 workers, then GDP would increase by
a. $10,500 b. $6,000 c. $1,500 d. $7,000 e. $1,000
First grade teachers who work in Lynn, Massachusetts's (a large, low income city north of Boston) public schools earn more than first grade teachers who work in private schools in more affluent communities north of Boston. Lynn teachers belong to a teachers' union. Which statement best explains the scenario described above?
a. Lynn school teachers receive a compensating differential because they work in a more difficult environment, and they receive higher than market equilibrium wages because they are members of a teachers' union. b. Lynn school teachers receive a compensating differential because they work in a more difficult environment, but they do not receive higher than market equilibrium wages because they are members of a teachers' union. c. Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, but they do receive higher than market equilibrium wages because they are members of a teachers' union. d. Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, and they do not receive higher than market equilibrium wages because they are members of a teachers' union.
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.