In Figure 9.6, if full employment occurs at QB, then aggregate demand is
A. Too great, causing demand-pull inflation.
B. Too great, causing cyclical unemployment.
C. Just right, causing no cyclical unemployment.
D. Too small, causing cyclical unemployment.
Answer: C
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Where do constraints come from?
What will be an ideal response?
The income effect indicates that:
A) a rise in money income will cause consumers to buy smaller quantities of normal goods. B) when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper. C) consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same. D) when the price of a product falls, a consumer will be able to buy more of it with a specific money income.
The natural monopoly in Figure 8.14 wants to produce:
A. Q1. B. Q2. C. Q3. D. Q4.
American farmers who sell beef to Europe benefit most from
A) a decrease in the dollar price of euros. B) an increase in the dollar price of euros. C) a constant dollar price for euros. D) a European ban on imports of American beef.