If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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Persistent deficit after 1980 was almost entirely due to
A) higher share of expenditures in GDP. B) lower tax revenue. C) lower share of expenditures in GDP. D) Higher tax revenue.
Effective price floors keep market price
A. above the equilibrium price and create surpluses. B. above the equilibrium price and create shortages. C. below the equilibrium price and create surpluses. D. below the equilibrium price and create shortages.
A bank run involves a large flow of money
A. into bank depositors’ accounts. B. into checking and savings accounts. C. out of depositors’ accounts. D. out of individuals’ cash reserves into money market funds.
Since people generally know that celebrities are paid to endorse products, celebrity endorsements signal to consumers that:
A. the celebrity loves the product. B. the product is appealing. C. only rich people can afford the product. D. All of these