Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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If an increase in income leads to an increase in the demand curve for sailboats, this will lead to
A. higher prices of sailboats. B. lower prices of sailboats. C. a corresponding shift in the supply curve for sailboats. D. reduced output of sailboats. E. no change in the price of sailboats.
Lessons that economists and policy makers have learned from the recent global financial crisis include
A) Developments in the financial sector have a far greater impact on economic activity than was earlier realized. B) The zero lower bound on interest rates can be a serious problem. C) The cost of cleaning up after a financial crisis is very high. D) Price and output stability do not ensure financial stability. E) All of the above.
In the long run,
a. output, once determined, cannot be changed b. price, once determined, cannot be changed c. land and capital cannot be changed d. all inputs are variable, that is, the quantities of all inputs can be changed e. labor can be changed, but all other inputs are fixed
If a company raises prices on a product with elastic demand, total revenues will probably decrease.
a. true b. false