According to the classical macroeconomic model discussed in the text, the key variable which adjusts to keep the economy in equilibrium when leakages are not equal to injections is ...
Select one:
a. the inflation rate
b. the interest rate
c. the unemployment rate
d. growth of real GDP
b. the interest rate
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Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?
A) The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. B) The consumer will bear the entire burden of the tax if the demand curve is D2 and the producer will bear the entire burden of the tax if the demand curve is D1. C) The consumer will bear a smaller share of the tax burden if the demand curve is D1. D) The consumer will bear a smaller share of the tax burden if the demand curve is D2.
Holding the price of a firm's output constant, if the marginal product of labor increases
A) the marginal products of other inputs also increase. B) the marginal revenue product of labor also increases. C) the marginal revenue product of labor may increase or decrease. D) the marginal revenue product of labor decreases.
Through open market operations, the Fed
A) controls the demand for reserves, but not the supply of reserves, in the banking system. B) controls the supply of reserves and the demand for reserves in the banking system. C) controls the supply of reserves, but not the demand for reserves, in the banking system. D) has influence over, but cannot directly control, the supply of reserves and the demand for reserves in the banking system.
What happens when a price floor is set above the equilibrium price?
a. The quantity demanded will exceed quantity supplied. b. The quantity supplied will exceed the quantity demanded. c. It moves the demand curve. d. It shifts the supply curve.