If growing income inequality results from or encourages more rent seeking that, as a whole, make society worse off, this will
A) increase the size of the economic pie despite the income inequality.
B) decrease the size of the economic pie.
C) not change the size of the economic pie because the rent-seeking behavior will benefit enough parties to completely offset the effects of the increases in income inequality.
D) result in complete income inequality as rent seeking continues to occur in the future.
B
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Positive economic principles are those that:
A. are influenced by political ideology. B. are always correct. C. predict how people will behave. D. indicate how people should behave.
Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy?
A) Aggregate demand is growing too fast to keep the economy at full employment. B) Potential GDP is forecasted to be lower than equilibrium GDP. C) Potential GDP is forecasted to be higher than equilibrium GDP. D) Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.
Actual output exceeds the natural output when
A) the actual budget deficit is above the structural deficit. B) the actual budget deficit is below the structural deficit. C) the structural deficit is positive. D) the structural deficit is negative.
Price should be
A) determined by equating average cost and marginal cost to determine quantity and then setting the price using that quantity and the demand curve. B) determined by equating marginal revenue and average revenue to determine quantity and then setting the price using that quantity and the demand curve. C) determined by equating marginal revenue and marginal cost to determine quantity and then setting the price using that quantity and the demand curve. D) determined by equating marginal revenue and long-run average cost to determine quantity and then setting the price using that quantity and the demand curve.