A contractionary supply shock would most likely result in
A) an increase in aggregate demand
B) an increase in national income
C) an increase in GDP
D) a decrease in the general price level
E) a decrease in employment
Answer: E) a decrease in employment
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Economies of scale
A) lead to rising long-run average costs as output increases. B) occur if output more than doubles when all inputs are doubled. C) occur if output less than doubles when all inputs are doubled. D) occur when management complexity brings rising average cost.
Price discrimination
a. may lead to greater output. b. always leads to a reduction of output. c. leads to lower profits for the firm. d. causes firms to operate at a higher cost.
Refer to Figure 18.1. Which of the following would most likely cause a shift from AD3 to AD2?
A. An increase in transfer payments because of a recession. B. An increase in the reserve ratio. C. An increase in taxes. D. A decrease in the discount rate.
An official agreement with another country in which it agrees to import more from the United States is
A. a regional trade bloc. B. the quota system. C. a voluntary restraint agreement. D. a voluntary import expansion.