Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run
a. the price level and real GDP will both rise.
b. the price level and real GDP will both fall.
c. neither the price leave nor real GDP will change.
d. All of the above are possible.
a
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The idea that a permanent increase in income causes a larger increase in consumption than a temporary change in income is called the
A) Friedman-Lucas theory. B) permanent income hypothesis. C) Ricardian equivalence theorem. D) intertemporal substitution effect.
What are the major sources of economic profit?
a. certainty, monopolistic competition, and inelastic supply. b. competition, perfect information, and elasticity of market demand. c. barriers to entry, uncertainty, and entrepreneurial alertness. d. externalities, inflation, and size of firm.
A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold
a. True b. False Indicate whether the statement is true or false
At the optimal level of public goods provision, society's total willingness to pay per unit is equal to the marginal cost of producing the good.
Answer the following statement true (T) or false (F)