Contractionary monetary policy is most likely to:
A. decreases interest rates, raises investment, and increases income.
B. increases interest rates, reduces investment, and decreases income.
C. increases interest rates, raises investment, and increases income.
D. decreases interest rates, reduces investment, and decreases income.
Answer: B
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.
Answer the following statement true (T) or false (F)
Price taking producers make zero economic profit when price falls
A. at the lowest point of the average cost curve B. at the point where marginal cost crosses average cost C. at the lowest point of the marginal cost curve D. both (a) and (b) E. both (a) and (c) F. both (b) and (c) G. All of the above H. None of the above
Why do workers exert more effort when they are paid higher salaries?
What will be an ideal response?