When actual output is less than potential output, there is ________ output gap and the rate of inflation will tend to ________.
A. an expansionary; increase
B. a recessionary; increase
C. an expansionary; decrease
D. a recessionary; decrease
Answer: D
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What would happen in a free market system when production of a good generates negative externalities?
A) There is a shortage of the good. B) There is a surplus of the good. C) The equilibrium quantity of the good is less than the efficient amount. D) The equilibrium quantity of the good is more than the efficient amount.
Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor. Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?
When there is a tendency for a particular product to come into favor with additional consumers because other consumers have chosen to purchase the product
A) negative market feedback occurs. B) positive market feedback occurs. C) there is no dominant strategy. D) a price war must result.
A sure sign of the existence of an underground market for rent-controlled apartments in New York City is that
A. some apartments are subleased from the dead. B. apartment dealers work alongside drug dealers on its city streets. C. an open bribe must be paid to the mayor to get a rent-controlled apartment. D. rents are high.