??Exhibit 16A-2 Macro AD/AS Models
?
?In Panel (a) of Exhibit 16A-2, an expansionary Keynesian government stabilization policy designed to move the economy from Y1 to Yp would shift the:
A. ?aggregate demand curve (AD)to the left.
B. ?aggregate demand curve (AD) to the right.
C. ?SRAS rightward.
D. ?LRAS rightward.
Answer: B
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If an incumbent threatens to retaliate against entry, but its profits are greater under accommodated entry than under the proposed threat, potential entrants will ignore the threat
What will be an ideal response?
Assume the economy is in short-run equilibrium at a real GDP above its potential real GDP. According to classical theory, which of the following policies should be followed? a. The Federal Reserve should use open market operations and buy U.S. government securities. b. The Federal Reserve should not follow a fixed rule
c. The federal government should cut taxes. d. Fiscal policy and monetary policy should not be activist.
According to the classical economists, which of the following statements is false?
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Your economics professor has announced that he or she will assign final grades as follows: the top 20 percent of students will get an A, the bottom 20 percent of students will get an F, and everyone else will get a C. This grading scheme generates a positional externality because:
A. each student's final grade depends on his or her relative standing. B. studying requires both time and effort. C. society as whole will be better off when people are educated. D. students will study hard no matter how the professor assigns final grades.