Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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If firms in a monopolistically competitive industry are making an economic profit, then
A) some customers will exit the market. B) some workers will leave the industry's labor force. C) some firms will leave the industry. D) new firms will enter the industry.
Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment. Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment
What will be an ideal response?
Which of the following policies is supported by the idea that producers and workers will demand higher prices and wages when they see the money supply expanding?
A. Discretionary policy B. Fixed rules C. The Fed's eclecticism D. Fiscal policy
The advice to "retrain" would be most appropriate for which of the following types of unemployment?
a) Cyclical unemployment b) Structural unemployment c) Frictional Unemployment d) Core Unemployment