Which of the following is a long-run adjustment?
A. A firm lays off two workers.
B. Two firms exit the asbestos removal industry.
C. A manufacturer increases its purchase of raw materials.
D. A farmer buys twice the usual amount of herbicide.
Answer: B
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Answer the next question using the following budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. Government SpendingTax RevenuesGDPYear 1$450$425$2,000Year 25004503,000Year 36005004,000Year 46406205,000Year 56805804,800Year 66006205,000As a percentage of GDP, the budget deficit was ________ in year 3.
A. 12.5% B. 2.5% C. 0% D. 15%
Use the following diagram of the market for money to answer the next question.
The downward slope of the money demand curve Dm is best explained in terms of the
A. asset demand for money. B. wealth or real-balances effect. C. direct or positive relationship between bond prices and interest rates. D. transactions demand for money.
A central bank that is buying its own currency might be trying to ________
A) weaken its currency B) increase the domestic money supply C) reduce domestic interest rates D) reduce inflation
A firm that incurs an emissions charge for polluting will install more pollution control equipment only if the:
a) Emissions charge exceeds the increased cost of installing the equipment. b) Emissions charge falls. c) Equipment will reduce pollution. d) Equipment cost is less than the marginal cost of production.