What is the best response of firm B, given firm A is charging a low price?
a. Charge a low price
b. Charge a high price
c. Charge zero, give the good away
d. All of the above
a
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If the economy is near full capacity, the effect of a negative aggregate demand shock is to
A) increase the level of aggregate demand. B) cause the price level to fall. C) increase the firm's cost of producing at every level of output. D) increase the level of employment.
It is possible for an economy to produce more than its potential level of output, at least for a short period of time
a. True b. False
A change in the slope of a budget line is solely the result of a change in:
A. consumer preferences. B. the price of one good relative to the other. C. money income. D. the slope of the indifference curve that is tangent to the budget line.
The proportion of the U.S. population below the poverty line
A. rises with upturns of the business cycle. B. has declined, though somewhat erratically, over the past 40 years. C. has been virtually eliminated by a vigorous "War on Poverty." D. covers roughly 20% of the same people year after year.