If competitive industry Y is incurring substantial losses, output will
What will be an ideal response?
contract as resources move away from industry Y.
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What is the distinction between innovation and invention?
A recessionary gap exists when the equilibrium level of GDP
a. falls short of potential GDP. b. equals potential GDP. c. exceeds potential GDP. d. causes inventory levels to fall.
When leisure is a normal good, the income effect from a decrease in wages is evident in
a. a desire to consume more leisure. b. a desire to consume less leisure. c. an upward-sloping labor-supply curve. d. a shift in labor demand.
Economic systems differ according to which two main characteristics?
A. Who owns the factors of production and the methods used to coordinate economic activity.
B. The technology used in production and the quantity and quality of natural resources.
C. How goods are produced and who gets them.
D. The political system in place and the degree of scarcity facing the economy.