The economy is in equilibrium, TP = TE. Then, net exports fall. As a result, the __________ curve shifts __________, inventory levels unexpectedly __________, and business firms __________ the quantity of good and services they produce
A) TE; upward; rise; increase
B) TP; rightward; rise; decrease
C) TE; downward; rise; decrease
D) TE; downward; rise; increase
E) none of the above
C
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Suppose you work for a government agency that is considering removing certain agricultural subsidies. The removal of these subsidies will increase the price, thus lowering consumers' welfare
Because only aggregate market data is available, you are unable to measure the exact values for the compensated and equivalent variation by consumer. However, you are able to estimate the change in market consumer surplus. Assuming agricultural products are normal goods, how does your estimate of consumer surplus compare to the unknown EV and CV? Explain. Under what conditions will the three measures of welfare be close to one another?
The tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions is called:
A. moral hazard. B. adverse selection. C. counter information. D. collective bargaining.
Macroeconomics is the branch of economics that focuses on:
a. broad issues such as growth, unemployment, inflation, and trade balance. b. the actions of particular agents within the economy, like households, workers, and business firms. c. the means of production (resources and businesses) that are owned and operated by private individuals or groups of private individuals. d. workers or firms, and whether they are well suited within the overall production process.
In the short run, an unanticipated increase in the money supply will exert its primary impact on
a. output and employment rather than on prices. b. prices; output and employment will be largely unaffected. c. interest rates; rising interest rates will stimulate additional saving. d. prices, if the economy operates at an output level below its long-run supply constraint.