When we compare PAE and actual output (Y) if PAE is greater than Y we expect that:
A. eventually production will decrease.
B. eventually production will increase.
C. the government will intervene by cutting down on taxes.
D. there will be no change in aggregate production.
Answer: B
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Refer to Scenario 6.1. If both Tasha and Gloria play their dominant strategies, Tasha's net payoff will be ________ and Gloria's net payoff will be ________
A) $15; $12 B) $15; $15 C) $30; $30 D) $12; $12
Keynes argued that because of sticky prices and wages
A) the short-run aggregate supply curve could be horizontal. B) the short-run aggregate supply curve is probably vertical. C) the long-run aggregate supply curve slopes downward. D) the aggregate demand curve is vertical.
The crowding-out effect refers to the tendency of expansionary fiscal policy to
A) cause decreases in planned investment or planned consumption. B) cause households to save less. C) replace low-skilled labor with higher-skilled labor. D) cause firms to produce beyond capacity.
Economists use the term "ceteris paribus" to indicate that: a. the analysis is true for the individual but not for the economy as a whole
b. supply and demand are in balance. c. their conclusions are based on normative rather than positive economic analysis. d. other things are assumed to remain constant.