Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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In 1971, the U.S. government banned cigarette advertising on radio and television. After the ban was imposed, an economist would predict that the price of magazine ads would
A. increase. B. decrease. C. increase, but only for cigarettes. D. not be affected by this ban.
Suppose that a change in the fiscal/monetary policy mix shifts the IS and LM curves downward by exactly the same amount. The ________ in national saving is accompanied by ________ domestic investment due to the ________ in the interest rate
A) fall, equally lower, lower B) fall, unchanged, unchanged C) rise, unchanged, unchanged D) rise, equally higher, lower E) rise, equally lower, higher
All of the following, except one, help explain why specialization leads to greater production than is otherwise possible. Which is the exception?
a. It allows the organization of production in business firms. b. Specialization reduces the time lost in moving from one activity to another. c. As workers repeat an activity over and over, they hone their skills and become more expert. d. Specialization allows workers to be assigned to the activities for which they have the greater natural ability. e. The more often workers repeat an activity, the more stimulating and enjoyable they find it.
Relating to the Economics in Practice on page 340: Europe has a carbon tax, and electricity producers are among the largest of the carbon producing firms. The carbon tax increased the price of electricity, and researchers found that the amount of the tax that was actually passed through to consumers reflected a ________ aggregate demand for electricity.
A. unit elastic B. perfectly inelastic C. slightly elastic D. very inelastic