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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Which is the smallest component of aggregate expenditure?
A) net export expenditures B) consumption expenditures C) government expenditures D) planned investment expenditures
In an economy with production function Y = 1.5 × , K = 343, and L = 512. If factor markets are in equilibrium, then the rental price of capital is (approximately) ________, and the real wage is (approximately) ________
A) 0.5; 0.8 B) 7; 8 C) 0.9; 1.35 D) 1.4; 0.4 E) 0.6; 0.9
Suppose managers of an art auction house are going to auction a painting that is believed to be painted by a famous artist. If the managers of the auction are able to provide evidence that the painting was created by the famous artist, the participants in the auction will have ________ confidence in their own valuation of the painting and will submit ________ bids.
A) less; lower B) less; more C) more; lower D) more; higher
The classicals believed that when savings exceeds investment.
A. demand is reduced and the economy will go into a recession. B. the interest rate will decline and equate savings and investment. C. an increase in supply will encourage higher investment spending. D. if savings is greater than investment unemployment would reduce savings.