Suppose that along the aggregate demand curve, real GDP equals $15 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal
A. more than $15 trillion.
B. more than $15 trillion but less than $15.8 trillion.
C. less than $15 trillion.
D. $15 trillion.
Answer: C
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Faced with a decrease in the demand for its product, a monopolist will lower prices and maintain output at its previous level if
A) the gain in profit is less than the increase in real wages paid. B) the gain in profit is less than the decrease in real wages paid. C) the gain in profit is less than the menu costs. D) the gain in profit is greater than the increase in menu costs.
The long-run Phillips curve is located at the natural rate of unemployment
a. True b. False Indicate whether the statement is true or false
The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that:
a. all industries will claim that they are infant industries in order to gain protection. b. the protected industry will become too efficient and drive out foreign competition. c. once in place, it is difficult to remove protection even as the industry matures. d. it causes the goods that are produced in the protected industry to have lower prices. e. this policy compromises national security if the infant industry produces military goods.
Markets can fail when there is
A) a clear definition of property rights. B) common property. C) an absence of externalities. D) competition.