Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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Currencies that are not backed by precious metals of equal value are called:
a. Near money. b. Repurchase agreements. c. Eurodollars. d. Fiat money. e. Legal tender.
The dominant firm in an oligopoly is the firm that ______.
a. produces a large portion of the total output b. undercuts the prices of its competitors c. provides an entry incentive to other firms d. practices perfect competition
What role can confidence and fear play in the economy?
A. Confidence and fear can shift the AD curve inward but not outward. B. Confidence and fear can shift the AD curve outward and inward, respectively. C. The impact of confidence and fear has not been effectively incorporated into macroeconomic models. D. Confidence and fear can shift the SRAS upward and downward, respectively.
Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by. It enjoyed high profits. After a while, Glen's gas another gas station opened up close by. The profits for the first gas station are likely to decrease because
a. it has to lower prices, since its product is now more price elastic b. It has to lower prices since its product is now more price inelastic c. due to the increased availability of substitutes d. both A&C