Refer to the above figure. Suppose the economy's initial equilibrium is represented by the intersection of LRAS1 and AD1. Suppose there is a persistent reduction in labor force participation, which reduces total planned production at any given price level. The resulting change in the economy's long-run equilibrium position would be represented by a
A. movement from C to A.
B. movement from B to C.
C. movement from A to C.
D. movement from A to B.
Answer: C
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Consider a game in which a player has a dominant strategy.
(i) If the game is played sequentially and the player moves first, will he necessarily choose his dominant strategy? Explain. (ii) If the game is played sequentially and the player moves second, will he necessarily choose his dominant strategy? Explain.
Supply-side economic policies seek to
A) raise interest rates through contractionary monetary policy. B) increase federal government expenditures. C) increase consumption expenditures by increasing taxes. D) increase saving and investment using tax incentives.
Holding other factors constant, the increase in the prison population over the past 30 years in the United States has likely
A) decreased structural plus frictional unemployment. B) increased cyclical unemployment declined. C) decreased cyclical unemployment increased. D) increased the natural rate of unemployment.
Monopolistically competitive firms ignore the effect of their decisions upon other firms in the industry because
a. each firm is large relative to the market b. each firm is small relative to the market c. there are few sellers in the market d. there is only one seller in the market e. all firms follow the same known pricing rules