The long-run aggregate supply curve is vertical at
A. potential output.
B. the actual level of nominal output.
C. 100% employment of the labor force.
D. the actual level of real output.
Ans: A. potential output.
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If a person receives a consumer’s surplus from the purchase of a good, it must be that
A. the amount that the person paid minus the amount that this person values that good is greater than zero. B. the amount that the person values the good minus the amount that this person paid for that good is greater than zero. C. the value is negative because consumers have diminishing marginal utility. D. result is based solely on the supply of the good.
When interest rates in the U.S. decline, we can expect net capital outflow to:
A. increase. B. decrease. C. be unaffected. D. be zero.
When the free-rider problem exists,
a. the market will devote too few resources to the production of the good. b. the cost of the good will always be more than the benefit of the good. c. the good will not be produced. d. entrepreneurs will eventually find a way to make free-riders pay their share.
According to the Lucas supply function, the amount of output produced is ________ to the price level if people's expectations of the price level are on target.
A. inversely related B. directly related C. negatively related D. not related