The long-run aggregate supply curve shifts to the right when ______, ceteris paribus.
a. producers are willing to supply less real output
b. firms experience relatively constant input costs
c. greater output is achieved on a sustainable basis
d. workers believe that the price level is going to increase
c. greater output is achieved on a sustainable basis
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Which of the following best defines time inconsistency?
A) the increasing inaccuracy of econometric models as the time horizon becomes longer B) the tendency for the rise in output to be greater in the early years of a president's term, and smaller in the later years C) the effects of political electoral cycles on the business cycle D) the tendency for policy makers to deviate from a pre-announced optimal policy once agents in the economy have adjusted their behavior and expectations based on the pre-announced policy E) the effect of economic uncertainty on short-run stabilization policy
The supply curve for whiskey is the typical upward-sloping straight line, and the demand curve for whiskey is the typical downward-sloping straight line. When whiskey is taxed, the area on the relevant supply-and-demand graph that represents
a. government's tax revenue is a rectangle. b. the deadweight loss of the tax is a triangle. c. the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle. d. All of the above are correct.
The interest rate that banks charge other banks for loans is the
A) discount rate. B) prime rate. C) federal funds rate. D) Treasury bill rate.
According to the household liquidity effect, higher stock prices lead to increased consumption expenditures because consumers
A) feel more secure about their financial position. B) want to sell stocks and spend the proceeds before stock prices fall. C) believe that their wages will increase due to increased profitability of firms. D) can now afford more expensive imports.