Figure 33-1
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Which of the following is true about the economy depicted in Figure 33-1?
A. Economy is experiencing supply-side inflation.
B. Policymakers have chosen to fight inflation rather than unemployment.
C. The increase in aggregate demand has increased prices but not real GDP.
D. The slope of the aggregate supply curve embodies the trade-off between unemployment and inflation.
Answer: D
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
A monopolistic competitor shuts down production in the short run if ________
A) marginal revenue equals marginal cost B) marginal cost equals average cost C) total revenues do not cover variable costs D) total revenues do not cover fixed costs
In a survey of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler asked their opinion of a hardware store's decision to
A) remain in business even though the store was not making an economic profit; 82 percent of those surveyed believed it would be unfair for the store to go out of business if there were no other hardware stores in the same area. B) go out of business because a larger hardware store opened in the same city; 82 percent of those surveyed believed it was unfair for the larger store to compete with the smaller store. C) sell tickets to sporting and cultural events at prices higher than prices paid at the ticket windows for the same events; 82 percent of those surveyed believed this was unfair. D) raise the price of snow shovels the day following a snowstorm; 82 percent of those surveyed believed this was unfair.
Refer to Scenario 7.6 below to answer the question(s) that follow. SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually.Refer to Scenario 7.6. Your annual operating profit is
A. -$10,000. B. $40,000. C. $70,000. D. $80,000.