In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices.
B. lower prices.
C. lower output.
D. None of these is true.
Answer: D
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If firms are more optimistic that future profits will rise and remain strong for the next few years, then
A) investment spending will remain unaffected. B) investment spending will rise and then fall. C) investment spending will rise. D) investment spending will fall.
Suppose that Year 1 is the base year. Year 2 real GDP is
A) $200. B) $270. C) $310. D) $390.
A perfectly competitive market is in equilibrium and 100,000 units are being produced. If three firms take over this market and a Cournot oligopoly is formed, what is the new total equilibrium quantity produced?
A) 75,000 B) 133,333 C) 82,500 D) 100,500
If something is to serve as money it must be a store of value. This means that it must
A) be divisible. B) be the standard by which all goods are compared in setting prices. C) hold its purchasing power over time. D) be liquid.