Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; higher
C. higher; potential
D. lower; higher
Answer: A
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A crucial feature of early Keynesian business cycle theory is that real wages vary ________, which in fact ________ clearly emerge from U.S. data on wages over time
A) countercyclically, does not B) countercyclically, does C) procyclically, does not D) procyclically, does
The power of the supply and demand model lies in its ability
A) to generally predict how price and quantity will change with supply and demand shocks. B) to precisely predict the impact of government regulations on quantity and price. C) to precisely determine the difference between price ceilings and price floors. D) to generally predict how profit motive impacts the distribution of goods and services.
Non-fed ground beef is an inferior good. In economic booms, grocery managers should:
A. increase their orders of non-fed ground beef. B. not change their orders of non-fed ground beef. C. reduce their orders of non-fed ground beef. D. neither increase, reduce, nor maintain their current orders for non-fed ground beef.
Using productive resources to make capital goods requires that we
A. forgo some level of current consumption. B. get government approval of our plan to make capital goods. C. prove that the existence of the capital goods will not cause any environmental damage. D. get everyone to agree on the best use of those resources.