The "butterfly effect" describes a situation in which a minor change in input (e.g., a butterfly flapping its wings in one part of the world) can have a major effect on output (e.g., a windstorm developing in another part of the world). This aspect of chaotic systems illustrates their property of:
a) The reiterative feedback loop.
b) Linearity.
c) Preordained periodic behavior.
d) The fractionation of outputs.
Answer: a) The reiterative feedback loop.
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Suppose that the market demand curve is 
and the market supply curve is 
.
a. Calculate the equilibrium price and output level.
b. Suppose a price floor of 16 is imposed in this market. What is the new equilibrium quantity transacted in the market?
c. How does the price that firms receive -- net any additional marginal effort costs they incur -- compare to the price consumers pay? d. What is the total cost of the additional effort firms have to exert in equilibrium? What will be an ideal response?
The long-run impact of unanticipated expansionary policy is ______.
a. underproduction b. overproduction c. deflation d. inflation
Speculators differ from hedgers in the sense that:
A. speculators are hedgers, there isn't any difference. B. speculators do not like risk. C. hedgers seek to transfer risk. D. speculators seek to transfer risk.
If policymakers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply, the appropriate fiscal policy response is to
A) increase taxes. B) increase government spending. C) use expansionary fiscal policy. D) increase interest rates.