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At a corner solution, which of the following is know to be true?
a. The slope of the indifference curve equals the slope of the budget line. b. The slope of the indifference curve is greater than the slope of the budget line. c. The slope of the indifference curve is less than the slope of the budget line. d. The slope of the indifference curve does not equal the slope of the budget line.
Assume that the current market price is below the market clearing level. We would expect:
A) a surplus to accumulate. B) downward pressure on the current market price. C) upward pressure on the current market price. D) lower production during the next time period.
Figure 33-8
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In Figure 33-8, which of the following movements reflects the closing of an inflationary gap through the economy’s self-correcting mechanism?
A. A to B B. A to C C. C to E D. D to E
In what way do policy makers have to face a trade-off between inflation and unemployment?
a. The cost of reducing inflation by restrictive fiscal and monetary policies is a temporary increase in unemployment. b. The cost of reducing inflation by restrictive fiscal and monetary policies is a permanent increase in unemployment. c. The cost of reducing unemployment by expansionary fiscal and monetary policies is virtually nonexistent. d. The cost of reducing unemployment by expansionary fiscal and monetary policies involves higher inflation during recessions.