When unwanted business inventories pile up, which of the following is likely to occur?
A. A lower price level.
B. A higher level of output.
C. A lower level of unemployment.
D. No change in the level of output.
Answer: A
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Why are inputs not included in the calculation of the gross domestic product?
What will be an ideal response?
In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________
A) the substitution effects outweigh the income effects B) the income effect outweighs the substitution effect C) the income and substitution effects cancel out with one another D) the income effect increases the severity of the substitution effect
During the recession witnessed in early 2001, many firms laid off their employees and downsized. The reason for this decrease in the demand for employees was:
a. a reduction in the demand for final goods. b. a reduction in the prices of final goods. c. an increase in the demand for final goods. d. an increase in the prices of final goods. e. the incompetency and poor performance of the employees.
The marginal benefit of pollution abatement is the
A. additional cost to clean up an additional unit of pollution. B. total social costs of pollution clean-up divided by total social benefits. C. additional benefit from cleaning up an additional unit of pollution. D. total social costs of pollution clean-up divided by the total units of clean-up.