When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease.
B. prices, causing them to definitely rise.
C. output, causing it to definitely increase.
D. prices, causing them to definitely fall.
Answer: A
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Use the figure below to answer the following question.
If actual production and consumption occur at Q2
A. missing surplus of a + b + c + d occurs. B. economic surplus is maximized. C. missing surplus of e + f occurs. D. missing surplus of a + c occurs.
Increases in government spending result in ________ in the short run, and permanent increases in government spending result in ________ in the long run
A) complete crowding out; complete crowding out B) partial crowding out; partial crowding out C) partial crowding out; complete crowding out D) complete crowding out; partial crowding out
If the supply curve slopes upward and a $3 per unit tax on suppliers raises the profit-maximizing price by $3, demand must be perfectly inelastic
a. True b. False
Xanfix sells wrenches and screwdrivers. It sells both products at the same price of $9.66 per unit. The firm calculates that the income elasticity of demand for wrenches is 1.5, while the income elasticity of demand for screwdrivers is 2.5 . If the overall consumer income is expected to increase by 6.8 percent in the year ahead, the company should: a. increase the production of both products,
but it should increase the production of screwdrivers by a greater amount than the production of wrenches. b. increase the production of both products, but it should increase the production of wrenches by a greater amount than the production of screwdrivers. c. increase the production of wrenches and decrease the production of screwdrivers. d. increase the production of screwdrivers and decrease the production of wrenches.