Refer to Figure 17-2. Suppose the economy is at point A. The Fed uses expansionary monetary policy to lower the unemployment rate permanently below the level associated with A. Which of the following will occur?
A) Inflation will accelerate in the long run.
B) Unemployment will accelerate in the long run.
C) Inflationary expectations will decline.
D) Unemployment will rise above the natural rate.
A
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Two firms, A and B, are in the market and barriers to entry keep other firms from entering. The managers are involved in a Cournot oligopoly and the figure shows the best response curves for the two firms . In the Cournot equilibrium, Firm A produces ________ units per year and Firm B produces ________ units per year.
A) 250; 200 B) 400; 200 C) 250; 500 D) 200; 100
An indication that Insurance companies anticipate adverse selection is
a. they do not require a deductible b. they do not classify clients into different risk types according to their claim history c. they do not classify clients into different risk types according to pre-existing conditions d. they require a co-payment
Efficiency is attained when
a. total surplus is maximized. b. producer surplus is maximized. c. all resources are being used. d. consumer surplus is maximized and producer surplus is minimized.
Which of the following will LEAST likely generate positive external effects to society?
A) education B) a novel C) health care D) requiring drivers to undergo a test for alcohol consumption