If the economy is on its short-run Phillips curve at the natural unemployment rate, then in the AS-AD model, real GDP is definitely
A) decreasing.
B) greater than potential GDP.
C) less than potential GDP.
D) increasing.
E) equal to potential GDP.
E
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The above figure shows the market for bicycles. When there is a physical fitness craze so that everyone wants to exercise the
A) demand curve for bicycles shifts from D1 to D2. B) demand curve for bicycles shifts from D2 to D1. C) demand curve and the supply curve of bicycles do not shift. D) supply curve of bicycles shifts from S1 to S2.
____ is one in which exactly the amount one competitor gains must be lost by other competitors.
A. Nash equilibrium B. Prisoner’s dilemma C. A win-win situation D. A zero-sum game
One thing the Fed has learned over the past twenty-five years is:
A. the money multiplier has a trend rate of growth that is fairly constant. B. it should focus its attention on targeting M2. C. the money multiplier is fairly constant no matter what changes are made to the monetary base. D. the money multiplier is unstable over time.
A government airline safety regulation reduces the probability of a fatal airline crash by 0.005. If the costs associated with each airplane crash are equal to $600 million and the costs of performing more frequent safety inspections equal $4 million, the regulation is:
A. cost-effective because the marginal cost is $3 million and the marginal benefit is $4 million. B. cost-effective because the marginal cost is $4 million and the marginal benefit is $600 million. C. not cost-effective because the marginal cost is $4 million and the marginal benefit is $3 million. D. not cost-effective because the marginal cost is $4 million and the marginal benefit is $1 million.