When no output gap exists actual output ________ potential output and the rate of inflation will tend to ________.
A. exceeds; increase
B. equals; remain the same
C. exceeds; decrease
D. is less than; decrease
Answer: B
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Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be
A) an increase in the price of sugar. B) a decrease in the price of sugar. C) a leftward shift of the demand curve for coffee. D) a leftward shift of the supply curve for sugar.
Marginal physical product diminishes as additional workers are hired because
A. Later hires do not work as hard as earlier hires. B. Later hires are not as skilled as earlier hires. C. Each worker has an increasingly larger amount of other factors with which to work. D. Each worker has an increasingly smaller amount of other factors with which to work.
Suppose money supply (M) = $500, real GDP (Y) = $1,000, and nominal GDP = $5,000. Calculate the value of velocity and the price level.
A) V=2;P=1 B) V=4;P=5 C) V=10;P=5 D) V=10;P=1
What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent?
A. 0.63 B. 1.61 C. 2.90 D. 4.00