If policymakers accommodate an adverse supply shock, then in the short run the unemployment rate
a. and the inflation rate rise.
b. and the inflation rate fall.
c. rises and the inflation rate falls.
d. falls and the inflation rate rises.
d
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If the revenues from a Pigovian tax are not directed to those who are affected by the externality, the outcome:
A. is efficient and maximizes surplus. B. is not efficient and does not maximize surplus. C. is efficient, but does not maximize surplus. D. is not efficient and maximizes surplus.
Suppose a basket of goods and services has been selected to calculate the CPI. In 2002, the basket's cost was $80; in 2008, the basket's cost was $92; and in 2010, the basket's cost was $108 . The base year must be
a. 2002. b. 2008. c. one of the years between 2008 and 2010. d. The base year cannot be determined from the given information.
The domestic demand and supply for sugar are Qd = 60,000 ? 400P and QSD = 20,000 + 500P. The foreign supply is QSF = 20,000 + 100P. What is the domestic quantity supplied at the domestic market price?
A. 10,000 B. 52,000 C. 22,000 D. 30,000
Suppose there are no barriers to entry in the market for facial tissues, where two brands dominate the industry. According to the theory of contestable markets, the price charged for facial tissues will be:
A. roughly equal to the cost of producing a box of facial tissue. B. far above the cost of producing a box of facial tissue. C. far below the cost of producing a box of facial tissue. D. much higher for the number-one-selling brand than it is for the number-two-selling brand.