Use the long-run model from Chapter 22 to describe the adjustment process the economy would go through from an increase in potential output.
What will be an ideal response?
The increase in potential output would shift the long run aggregate supply curve to the right. The aggregate demand curve, as well as the short-run aggregate supply curve would not changed. Without a response from monetary policymakers, the short run aggregate supply curve would shift downward eventually restoring potential output at a lower rate of inflation. Alternatively, if the central bank responds by shifting the monetary policy reaction curve to the right, it could speed the adjustment of the economy to the new, higher potential output while maintaining its former inflation target.
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Which of the following does free trade encourage?
A) higher rates of economic growth B) more rapid spread of technology C) domestic industries' access to larger markets D) all of the above
Refer to Figure 7-3. On the above graph, identify the market equilibrium price and quantity, the efficient equilibrium price and quantity, and the value of the deadweight loss resulting from too few people receiving vaccinations
What will be an ideal response?
The vertical intercept of the consumption function measures autonomous consumption. It represents the combined impact on consumption spending of all factors other than disposable income
a. True b. False
According to Marx, reason(s) for the inevitable collapse of capitalism is (are)
a. under production b. a lower capita labor ratio c. rising profits d. class conflict e. increasing surplus value