Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1.
B. P2 and Y1.
C. P2 and Y3.
D. P1 and Y2.
Answer: B
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The economy is at full employment when all unemployment is ________
A. structural B. cyclical C. structural and cyclical D. structural and frictional
If a firm in a perfectly competitive industry experiences persistent losses, in the long run it should
A) shut down temporarily and wait for market conditions to change. B) continue to operate if it can raise the demand for its product through advertising and quality improvements. C) exit the industry. D) raise its price to cover average total cost.
Consider the following: The relative price of hamburgers this year has
A) increased. B) decreased. C) stayed the same. D) Not enough information has been given to calculate an answer.
Which of the following about Social Security is true?
a. The regressive nature of the Social Security benefit formula works to the disadvantage of blacks and other groups with below-average earnings. b. Social Security works to the disadvantage of blacks and other groups with below-average life expectancy. c. Blacks derive a higher rate of return from their Social Security taxes than whites. d. Hispanics derive a lower rate of return from their Social Security taxes than both whites and blacks.