E. Carey Brown, an MIT economist, studied government deficits during the Great Depression and found that even though actual deficits were large, the structural deficit changed very little. Which of the following statements is consistent with this finding?
A. Fiscal policy did not work during the Depression.
B. Fiscal policy made the Depression worse.
C. Fiscal policy was not tried during the Depression.
D. Fiscal policy improved the economy during the Depression.
Answer: C
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The benefit to the firm of hiring another worker is
A) the nominal wage. B) the price level. C) the real wage. D) the extra output produced by the worker. E) measured as the height of the production function.
A country will realize no gains from trade if
A) pre-trade and free-trade relative prices are identical. B) all countries employ the same technology. C) it does not have an absolute advantage in at least one good. D) its wage exceeds the world average. E) pre-trade and free-trade relative prices are not identical.
The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as
A) revenue exceeds producer surplus. B) producer surplus is positive. C) producer surplus exceeds fixed cost. D) producer surplus exceeds variable cost. E) profit and producer surplus are equal.
In the aggregate demand–aggregate supply model, which of these changes is most likely when the cost of production increases in the long run? a. A leftward shift of the short-run aggregate supply curve b. A leftward shift of the short-run aggregate demand curve c. A rightward shift of the short-run aggregate supply curve d. An increase in the potential output level increases
e. A decrease in the actual price level decreases.