Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect
a. the price level to rise and real GDP to fall.
b. the price level to fall and real GDP to rise.
c. the price level and real GDP both to stay the same.
d. All of the above are possible.
B
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Moral hazard occurs because people act
A) in the interest of others at all time. B) in the best interest of society. C) in their own self-interest. D) like anarchists.
Suppose a smoker wants to quit smoking. The utility that he gets from smoking a cigarette now is 6 utils but, in the long run, that cigarette will generate undiscounted health problems of 10 utils (e.g., an elevated risk of lung cancer)
Use the concept of discounting to explain why impatient smokers may not quit smoking even though the undiscounted net utility of smoking is negative.
As we move down a particular indifference curve, if the "marginal rate of substitution" between the two goods does not change we can conclude that the two goods are:
A) perfect substitutes. B) perfect complements. C) totally unrelated. D) both inferior goods.
Which of the following is the term for an innovative new product or production technology that disrupts the status quo in a market, leading the innovators to earn more income and profits and the other firms to either lose income and profits, or come up with their own innovations?
a. disruptive technological change. b. disruptive market change. c. disruptive trade change. d. disruptive transfer change.