If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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Consider the following hypothetical scenarios:
Scenario A: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45. The sales attendant at the store tells you that the pair of jeans you wish to buy is on sale for $160 at another store, located about a 20-minute drive away. Scenario B: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45. The sales attendant at the store tells you that the t-shirt you wish to buy is on sale for $30 at another store, located about a 20-minute drive away. Based on standard economic theory, under which scenario would you make the 20-minute trip to the other store? A) Scenario A because the pair of jeans is a very expensive item and $15 saving is quite substantial B) Scenario B because a $15 saving amounts to a substantial discount (about 33 percent) C) in either scenario if I think a $15 savings is worth the 20-minute trip D) in none of these scenarios if I think the $15 saving is not worth the 20-minute trip E) C and D are correct answers.
On the basis of the equation of exchange, the policy makers of an economy predicted that an increase in money supply would result in an increase in real gross domestic product. This prediction was based on the assumption that: a. there were no fluctuations in the interest rate
b. the velocity of money in the economy did not increase. c. the nominal gross domestic product of the economy was constant. d. the discount rate was fixed.
The government intervenes in the economy to protect labor by
A. Ensuring minimum wages in addition to overtime provisions. B. Ensuring workplace safety conditions. C. Enforcing child labor laws to prevent child exploitation. D. All of the choices are correct.
Which of the following would not be considered price discrimination?
A. charging more money for long distance calls during business hours than on weekends B. giving students a discount on ski lift tickets C. charging higher rates for oil delivery to people who live farther from your business D. charging less money to wash a large luxury car than a small economy car