An increase in the consumption of a good resulting from a reduction in price that makes the good cheaper in relation to other goods is called the
a. substitution effect.
b. income effect.
c. real balance effect.
d. inelasticity effect.
A
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Government attempts to set prices below market equilibrium can:
A. lead to more producer surplus. B. encourage more production. C. reduce the total surplus in the market. D. always create a better outcome.
A nation can determine how close it is to the classical range by considering its:
a. Export position. b. Net export position. c. Capacity utilization index. d. Exchange rate. e. All of the above.
Government-run employment agencies and public training programs are operated by the government to try to facilitate job search and reduce unemployment
a. Almost all economists agree that such programs are of no use. b. Almost all economists agree that such programs work very well. c. Some economists claim that the government can do these things no better than firms and individuals could do them for themselves. d. Some economists claim that these programs increase frictional unemployment.
Keynesians are most likely to:
A. include discouraged workers in their calculation of the unemployment rate. B. believe actual unemployment equals target unemployment. C. believe unemployment is not a problem. D. exclude discouraged workers in their calculation of the unemployment rate.