An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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If buyers expect future price increase, they will ___________ their purchases while sellers will __________ production
a. Accelerate; accelerate b. Accelerate; delay c. Delay; accelerate d. Delay; delay
The government’s role in a laissez-faire system includes
A. determining market prices B. constructing and maintaining roads and infrastructure C. determine the levels of profits earned by firms D. impose minimum wages
An economic model
a. uses equations to understand normative economic phenomena b. often omits crucial elements c. simplifies reality in order to focus on crucial elements d. tries to make simple concepts more complex e. cannot be proven wrong
Which statement is true?
A. There was a great deal of stagflation in the 1960s. B. We had full employment for most of the 1980s. C. We have had twelve recessions since the beginning of 1945. D. None of the choices are true.