It is useful to assume that there is a single representative consumer because
A) this is realistic.
B) this is a useful abstraction if we are interested in problems where distribution effects are not important.
C) this is the only model we know how to work with.
D) a model with one consumer is the same as one with many consumers.
B
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In the short run in the Keynesian model, a sharp increase in oil prices would leave the economy with a ________ level of output and a ________ real interest rate
A) higher; lower B) lower; higher C) lower; lower D) higher; higher
Economists believe that lower taxes should reduce unemployment because:
A. people have more incentive to find a job, knowing they will keep more of the income they earn from the job when taxes are low. B. people will not want to miss out on the opportunity to keep more of the income they earn when taxes are lower, so they will have an incentive to keep their job and not quit. C. people have more incentive to be productive if the money they earn is not being taxed as much when taxes are low. D. None of these is true.
A monopolistic firm is a:
a. price taker that faces the market supply curve. b. price taker that faces the market demand curve. c. price maker that faces the market supply curve. d. price maker that faces the market demand curve.
A temporary decrease in the price of oil would be considered a:
A. long-run supply shock. B. demand shock. C. short-run supply shock. D. The changing price of oil would not affect any of these.