In the classical range of the aggregate supply curve, greater spending for consumer and investment goods results in:
A. stagflation.
B. more unemployment.
C. greater output.
D. a higher price level.
Answer: D
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If the U.S. Postal Service raised its first-class postage rate by 10 percent and found (to its surprise) total receipts from first-class mail service subsequently increased by 10 percent, the demand for first-class mail service would be
A) completely elastic. B) completely inelastic. C) greater than anticipated. D) unit elastic. E) upward sloping.
When Jaya Lewis was asked what it would take to get her to provide Eva Hillman an hour of tutorial lessons in economics, she replied,"$10.". So Eva said,"Fine, I'll pay you $10.". "No, no," Jaya, replied, the market price is $15!" Exasperated, Eva paid the $15 . Did Jaya change her mind about the price during the conversation?
a. Yes, she realized that Eva was willing to pay more so changed her asking price from $10 to $15. b. Yes, the $5 difference in price was obviously negotiable and Jaya went for the higher price c. No, Eva changed her mind. At first she was willing to pay $10 then decided to pay the $15. d. No, Eva was testing Jaya's willingness to supply tutorial lessons and discovered it was $15. e. No, it was simply a case of Jaya's opportunity cost being less than market price so Jaya ends up with a $5 producer surplus
The Shackled Foot Corporation is a conglomerate with four major divisions. Each division has performed poorly over the years and none has a return greater than 2 percent. Karen, who could have invested her money at 5 percent, buys the company. What does her action imply?
Economist Abba Lerner compared the economy to a car needing:
A. An efficiency wage to make the labor markets work like an efficient engine B. Regular price-level surprises, like oil changes, to make it run smoothly C. A "steering wheel" that the government can use to guide it forward D. A monetary rule to prevent a "backseat driver" from making it go off course