Which of the following is true for the economy depicted in Figure 9-2?
a. potential output equals y1
b. it would be impossible for this economy to achieve an output greater than y1
c. when output y1 is achieved, the actual rate of unemployment will exceed the natural rate of unemployment
d. when output y1 is achieved, the actual rate of unemployment will be less than the natural rate of unemployment
Answer: a. potential output equals y1
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A. less than $1,000. B. more than $2,000. C. at least $3,000. D. the ticket price plus his cousin’s offer, a total of $4,000.
A firm’s budget line shows a given expenditure on production, given the input prices for the production process.
Answer the following statement true (T) or false (F)
Under the assumption of rational expectations, an anticipated increase in the money supply has no effect on
A) nominal GDP. B) real GDP. C) the price level. D) velocity.
Managers in oligopoly firms must
A) eliminate any barriers to entry if they hope to make short-run profits. B) advertise heavily in order to differentiate their product. C) anticipate the reaction of rival firms. D) establish many varieties of their products to cover the spectrum of consumer tastes.