When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing
i. seasonal unemployment.
ii. structural unemployment.
iii. cyclical unemployment.
A) i and iii B) ii and iii C) ii only D) i and ii E) i only
C
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Suppose that a consumer is at an optimum consuming X and Y. If the price of X falls, then to get to a new equilibrium the consumer must
A) purchase less X and more Y. B) purchase less Y and less X. C) purchase more X. D) purchase more Y.
Contrary to this perspective on the economy
What will be an ideal response?What will be an ideal response?
Economists who favor activist monetary policy often argue that
A) during the mid-1970s, money supply growth rates were nearly constant and still the economy went through a recession. B) during the mid-1970s, activist monetary policy was applied and the economy was healthy and stable. C) activist monetary policy is inflexible and this is one of its virtues; the money supply doesn't change every year in response to political considerations. D) activist monetary policy is likely to be destabilizing most of the time, but still it is the better way to proceed.
Which of the programs below would not transfer wealth from young to old generations?
a. Taxes are reduced as a result of cutting expenditures on education. b. Taxes are raised to improve government infrastructure such as roads and bridges. c. Taxes are raised to provide more generous Social Security benefits. d. Taxes are raised to provide more generous Medicare benefits.