In the long run, policy that changes aggregate demand changes
a. both unemployment and the price level.
b. neither unemployment nor the price level.
c. only unemployment.
d. only the price level.
d
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Economic theory assumes citizens vote
A) in total ignorance of each issue. B) in their own interest. C) in the public interest. D) by systematically discounting their long-run interests.
Refer to Figure 3-2. A decrease in the number of firms in the market would be represented by a movement from
A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. If 10,000 units of iced tea are sold
A) the marginal benefit of each of the 10,000 units of iced tea equals $3. B) marginal benefit is less than marginal cost. C) the deadweight loss is equal to economic surplus. D) producer surplus equals consumer surplus.