If the economy is self-regulating, explain the correct sequence of events that occurs once the economy is in a recessionary gap to move the economy to long-run equilibrium
The actual unemployment rate is greater than the natural unemployment rate and actual Real GDP is less than Natural Real GDP. Labor market surpluses will push wages down and the SRAS curve will shift to the right. This shift will cause the price level to fall, so the real balance, interest rate and international trade effects will make the quantity demanded of Real GDP increase and the economy will move down the AD curve. Ultimately, the economy will move to long-run equilibrium and produce its Natural Real GDP.
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What role might discrimination play in accounting for income inequality?
What will be an ideal response?
Allocative efficiency requires that
a. MC equals ATC. b. MC equals P. c. AR equals AFC. d. MC equals MR.
When economic rent exists,
A) the price is equal to the opportunity cost of the resources. B) price is the same as the discount rate. C) resources are allocated inefficiently. D) resources are allocated efficiently.
If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will
a. fall. b. rise. c. exceed the price in foreign countries. d. be below the price in foreign countries.