When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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All else equal, relative to a person who earns minimum wage, a person who earns $30 per hour has:
A. a lower opportunity cost of driving farther to work. B. a higher opportunity cost of taking the day off work. C. the same opportunity cost of spending time on leisure activities. D. a higher opportunity cost of working an additional hour.
Answer the next question on the basis of the following information about a hypothetical economy.Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer price index = 110 The unemployment rate is
A. 12.5%. B. 25%. C. 16.7%. D. 18.8%.
A sudden fall in the market demand in a competitive industry leads to
a. A short run market equilibrium price higher than the original equilibrium b. A market equilibrium price higher than the short run price c. New firms entering the market d. All of the above
During periods of U.S. prosperity,
a. imports from other countries are undesirable b. imports from other countries are sought out c. countries importing goods to the U.S. may use their earnings to buy American goods d. countries importing goods to the U.S. are unable to buy American goods