An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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If Sam can chop up more carrots per minute than Joe can, then
a. Joe has an absolute advantage in carrot chopping b. Joe must have a comparative advantage in carrot chopping c. Sam has an absolute advantage in carrot chopping d. Sam must have a comparative advantage in carrot chopping e. we can conclude nothing about absolute advantage
When the possibility for strongly efficient contracts occurs, what will happen?
A. Isoprofit lines must be horizontal. B. The union and firm negotiate over the wage level but not over the employment level. C. The labor demand curve must be vertical. D. Isoprofit lines are parabolas that open upward. E. The union and firm negotiate over the employment level but not over the wage.
A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because:
A. government spending is more employment-intensive than is either consumption or investment spending. B. government spending increases the money supply and a tax reduction does not. C. a portion of a tax cut will be saved. D. taxes vary directly with income.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.