If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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If the banking sector borrows internationally and lends locally, how does this intensify a financial crisis?
What will be an ideal response?
Senator DuMonde favors a government program that he believes will help save endangered species. Economic analysis indicates that
a. because Senator DuMonde has good intentions, his new program will have the desired results. b. Senator DuMonde's new program could have unintended consequences that might result in an outcome different from what was intended. c. regardless of any secondary effects, costs should not be considered when designing environmental legislation. d. because Senator DuMonde's proposal is a government program, it will not have an opportunity cost.
Why is water much cheaper than diamonds even though water is essential to human lives while diamonds are NOT?
What will be an ideal response?
All of the following are characteristics of a monopolistically competitive industry EXCEPT
A. many firms. B. low barriers to entry and exit. C. sales promotion and advertising. D. homogeneous products.