Products that have inelastic demand have many substitutes
Indicate whether the statement is true or false
False
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Suppose the unemployment rate in 2001 was 4.7, lower than the 5.4 percent unemployment rate that policymakers think is consistent with price level stability. Accepting the dictates of the Phillips curve, they would probably forecast for 2002
a. a higher rate of inflation b. a lower rate of inflation c. a higher rate of GDP growth d. a recession e. an economic stabilization at 4.7 percent unemployment
For a typical firm, the long-run average total cost curve:
A. is lower than the short-run average total cost curves. B. is tangent to each possible short-run average total cost curve at one point. C. intersects each possible short-run average total cost curve at two points. D. passes through the minimum points of all possible short-run average variable cost curves.
When private goods have external benefits:
A. marginal social cost is greater than marginal private cost. B. marginal privates cost is greater than marginal social cost. C. marginal social benefit is greater than marginal private benefit. D. marginal private benefit is greater than marginal social benefit.