If demand is ________ with respect to price, a price increase will ________ total revenue.
A. inelastic; decrease
B. inelastic; increase
C. elastic; increase
D. unit elastic; decrease
Answer: B
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Consider a monopolistically competitive industry which is in long-run equilibrium. Which of the following is TRUE?
A) All firms charge a price equal to average total cost. B) All firms charge a price equal to marginal cost. C) All firms earn positive economic profit. D) Demand, average total cost, and marginal cost all intersect.
When the production of a good creates an external cost, in order for taxes to be effective in achieving the efficient allocation of resources, the tax must be set equal to the
A) marginal private cost. B) marginal external cost. C) marginal social cost. D) marginal benefit of polluting.
A change in expected inflation shifts
a. the short-run Phillips curve, but not the long run Phillips curve. b. the long-run Phillips curve, but not the long run Phillips curve. c. neither the short-run nor the long-run Phillips curve. d. both the short-run and long-run Phillips curve right.