Refer to the graph below. It is given that the economy is at an initial equilibrium at point A. In mainstream economic view, the effect of a significant increase in productivity on the economy can best be represented by a shift from:
A. ASLR2 to ASLR1
B. AD1 to AD2
C. ASLR1 to ASLR2
D. AD2 to AD1
C. ASLR1 to ASLR2
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The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________
A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease
Income inequalities are greatest in
A. Poor countries such as Namibia. B. Developed countries such as Japan. C. Rich countries such as the United States. D. Countries with high levels of GDP.
A new major league baseball expansion team is moving to your town. It will inject consumer spending worth $40 million into your local economy initially. The Chamber of Commerce predicts that this will generate a total of $500 million in additional spending for your town. The team owners think that this is an underestimate. What do you need to know to figure out who is right? Explain.
What will be an ideal response?
Behavioral economics recognizes that people use System 1 to make decisions more often than they use System 2. Which of the following is an implication of that decision-making process?
A. A majority of decisions are not made according to the neoclassical assumption of rational behavior. B. Most decisions involve careful calculation of costs and benefits. C. Even though most decisions are irrational, the neoclassical model still accurately predicts outcomes. D. System 1 is best at making optimal decisions.