What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
A. Government is unable to respond by changing the amount of money in circulation.
B. Changes in total spending cause supply shocks that cause cyclical variation.
C. Prices are sticky in the short run.
D. Prices are flexible in the long run.
C. Prices are sticky in the short run.
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GDP would be a better measure of economic well-being if it included:
A. the value of leisure. B. the market value of final goods. C. the total value of intermediate goods. D. the costs of education.
If there are no changes in inflation expectations, a purchase of government bonds by the Fed in the open market will cause ________
A) the federal funds rate to rise and the long-run expected real interest rate to fall B) both the federal funds rate and long-run expected real interest rate to fall C) both the federal funds rate and long-run expected real interest rate to rise D) the federal funds rate to fall and the long-run expected real interest rate to rise
Labor hoarding occurs when
A) firms keep good workers so other firms can't hire them. B) the unemployment rate exceeds the natural rate of unemployment. C) involuntary unemployment exceeds voluntary unemployment. D) because of hiring and firing costs, firms retain workers in a recession that they would otherwise lay off.
The demand curve in its home market is P = 200 - Q; the demand curve in its foreign market is P = 160 - 2Q; and its marginal cost is a constant $20 per unit. What is the discriminating monopolist's price in the domestic market?
a. $90 b. $110 c. $70 d. $35