A characteristic of a good model is that
A) its predictions can be tested using real-world data.
B) it is useful for making irrefutable predictions.
C) it applies to all situations.
D) it predicts perfectly.
Answer: A
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Which of the following statements is true of the long run?
A) Identical firms can enjoy positive economic profits. B) Identical firms face an upward-sloping supply curve. C) Non-identical firms can enjoy positive economic profits. D) Non-identical firms face a horizontal supply curve.
Suppose the economy starts off producing Natural Real GDP. Next, aggregate demand rises, ceteris paribus. As a result, the price level rises in the short run. In the long run, when the economy has moved back to producing Natural Real GDP, the price level will be
A) higher than it was in short-run equilibrium. B) lower than it was in short-run equilibrium but higher than it was originally (before aggregate demand increased). C) lower than it was originally (before aggregate demand increased). D) equal to what it was originally (before aggregate demand increased).
Frictional unemployment goes up when:
A. Students quit work to return to school at the end of the summer. B. A corporation transfers a worker to another city. C. A worker quits one job in order to search for another. D. There is inadequate demand for labor.
Recent decades have seen a trend toward globalization, which means that buying and selling in markets have crossed national borders to an increasing extent. As a result, firms and workers from different countries are increasingly interconnected. Globalization has occurred for a number of reasons. List three reasons and briefly describe their effect contributing toward globalization.
What will be an ideal response?