The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation. What did this technological change do the short-run supply curve?
A) It shifted the short-run aggregate supply curve to the left.
B) It shifted the short-run aggregate supply curve to the right.
C) It moved the economy up along a stationary short-run aggregate supply curve.
D) It moved the economy down along a stationary short-run aggregate supply curve.
Answer: B
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Price ceilings, such as rent ceilings, set below the equilibrium price
A) increase producer surplus. B) decrease producer surplus. C) do not affect producer surplus. D) might increase or decrease producer surplus.
The exchange of one good for another, without the use of money, is known as
a. acquisitive exchange b. liquidity c. volatility d. barter e. currency
Suppose the government of a small country has to frame a policy which would promote the level of domestic production of an import-competing industry, because domestic production is believed to create extra benefits for the country. The government believes that it has a choice of either imposing a tariff on the foreign goods or providing production subsidies to the domestic firms. Which policy should the government choose and why? Explain with a diagram. Is there a particular principle that can guide the government's decision? If so, name it and state it.
What will be an ideal response?
If the marginal propensity to consume (MPC) is 0.8, the spending multiplier will be
A. 0.2. B. 8. C. 5.0. D. 4.0.