The economy experiences an increase in the price level and a decrease in real domestic output. Which is a likely explanation?
A. Productivity has increased.
B. Excess capacity has decreased.
C. Input prices have increased.
D. Government regulations have been reduced.
Answer: C
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A monopolistically competitive firm's marginal revenue curve
A. is downward-sloping and coincides with the demand curve. B. does not exist because the firm is a "price maker." C. is downward-sloping and lies below the demand curve. D. coincides with the demand curve and is parallel to the horizontal axis.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Of the three motives for the demand for money recognized by John Maynard Keynes, which one is very sensitive to changes in interest rate?
A. Transactions B. Medium of exchange C. Speculative D. Precautionary
A "rational terrorist" will react to the increased security at U.S. airports by
A. attacking U.S. airports. B. attacking other highly-defended targets. C. ending all attacks. D. attacking other high value U.S. interests outside the U.S.