According to the Lucas supply function, the economy will produce ________ output when prices are unexpectedly ________ than when prices are at their expected level.
A. the same; lower
B. the same; higher
C. more; higher
D. less; higher
Answer: C
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If real wages fall:
A) consumer demand is likely to increase. B) employers are likely to hire more workers. C) the level of economic production will always increase. D) the level of economic production will always decrease.
Refer to Figure 8.2. If the firm expects $80 to be the long-run price, how many units of output will it plan to produce in the long run?
A) 22 B) 34 C) 38 D) 50 E) 64
If U.S. residents boycotts French goods, this will
A) reduce the demand for euros in the foreign exchange market. B) increase the demand for euros in the foreign exchange market. C) cause the euro to appreciate. D) have no effect on the euro.
Refer to the graph. Suppose a particular financial asset's risk and return profile puts it at point E. The process of arbitrage will:
A. move the financial asset to point G on the Security Market Line.
B. move the financial asset to point D.
C. move the financial asset to point F.
D. not change the financial asset's position on the Security Market Line.