If short-run equilibrium output equals 50,000 and potential output (Y*) equals 45,000, then this economy has a(n) ________ gap that can be closed by ________.
A. recessionary; increasing government purchases
B. expansionary; increasing transfer payments
C. expansionary; decreasing government purchases
D. expansionary; decreasing taxes
Answer: C
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The Solo Coal Mine is the only employer in the small town of Way out there. The market supply of coal miners is Qs = 0.02W - 200, where W is the annual wage of a coal miner and Q is the number of people who would accept employment as a coal miner. What is the inverse supply function for coal miners?
A. W = 0.02Qs - 200 B. W = 0.02Qs + 200 C. W = 50Qs + 10,000 D. W = 200Qs + 500
In the long run, which of the following is not a problem for a monopolist earning economic profit?
a. other firms have an incentive to create substitutes for the monopolist's product b. technological change tends to break down barriers to entry c. patents expire, licenses must be renewed, and new sources of essential resources may be discovered d. government often decides to regulate monopolies e. all profit will gradually be converted to consumer surplus
Gross domestic product is equal to the market value of all goods and services
a. exchanged during a period. b. produced domestically during a period. c. produced by the citizens of a nation during a period. d. produced domestically during a period minus the depreciation of productive assets.
The definition of M2 includes
What will be an ideal response?