Given full-employment output = $2,800, equilibrium output = $2,500, and MPS = 0.25, which of the following changes would most likely bring the economy to a full- employment level of national output?
a. $300 decrease in taxes
b. $75 increase in government spending
c. $75 decrease in taxes
d. $300 increase in government spending
e. $75 decrease in government spending
B
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The rate of inflation tends to remain constant when
A) the unemployment rate is above the NAIRU. B) the unemployment rate equals the NAIRU. C) the unemployment rate is below the NAIRU. D) the unemployment rate increases faster than the NAIRU increases.
Suppose the market supply is initially at S1 and a price ceiling is set at 8. If supply shifts from S1 to S2, then
A. The price ceiling will no longer bind.
B. The price ceiling will prevent output from changing.
C. The size of the shortage will increase.
D. The market will not reach equilibrium.
Refer to Figure 12.2. How many Nash equilibriums are there?
A. 0
B. 1
C. 2
D. 3
Cartels are difficult to maintain because
a. antitrust laws are difficult to enforce. b. cartel agreements are conducive to monopoly outcomes. c. there is always tension between cooperation and self-interest in a cartel. d. firms pay little attention to the decisions made by other firms.