To cut inventories, firms produce ________ and real GDP ________, which ________ people's incomes
A) less; rises; lowers
B) less; falls; lowers
C) less; rises; raises
D) more; falls; lowers
E) more; rises; raises
B
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Refer to Figure 12-16. Which panel best represents the perfectly competitive organic produce market in which firms are breaking even, economically, organic produce is considered a normal good, and the average income level of consumers is rising?
A) Panel A B) Panel B C) Panel C D) Panel D
When the law of diminishing returns takes effect
A) firms must add increasingly more input if they are to maintain the same extra amount of output. B) firms must add decreasingly more input if they are to maintain the same extra amount of output. C) more input must be added in order to increase its output. D) a firm must always try to add the same amount of input to the production process.
When there is an abrupt increase in the rate of inflation,
a. the actual rate of inflation will tend to fall below the natural rate. b. the actual rate of inflation will tend to rise above the natural rate. c. the actual and natural rate of inflation will generally be equal. d. the natural rate of unemployment will tend to rise.
If the short-run Phillips curve has a very flat slope, the
A. structural deficit will grow during inflation. B. structural deficit will fall during recession. C. inflation costs of reducing unemployment are relatively low. D. inflation costs of reducing unemployment are relatively high.