Which of the following is a long-run adjustment?
A. A firm hires two new workers.
B. The number of professional baseball teams increases by two.
C. GM buys more steel for its auto plants in Michigan.
D. A farmer buys twice the usual amount of fertilizer.
Answer: B
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The increase in unemployment associated with a recession is called:
a. structural unemployment. b. frictional unemployment. c. discouraged unemployment. d. cyclical unemployment. e. temporary unemployment.
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
a. cause foreign producers to be better off, because the price they charge is now higher by $1 per box. b. cause domestic producers to be worse off by $5 per box. c. allow domestic consumers to enjoy kiwi fruit for $5 more per box than the free trade price, but still $2 less than the domestic price. d. allow domestic consumers to enjoy kiwi fruit for $1 more per box than the free trade price, but still $1 less than the domestic price. e. cause domestic producers to be worse off by $10 per box.
Equilibrium GDP on the demand side occurs when total spending
a. equals total production, and inventories are zero. b. equals total production, and firms are unable to adjust inventories. c. exceeds total production, and inventories are rising. d. equals total production, and inventories remain at desired levels. e. is less than total production, and inventories are falling.
In the open-economy macroeconomic model which of the following falls if there is an increase in the budget deficit?
a. the interest rate b. net exports c. the exchange rate d. All of the above are correct.