Refer to Figure 13-2. Ceteris paribus, an increase in the capital stock would be represented by a movement from
A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.
A
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Given a positive externality, the marginal social benefits curve lies to the __________ of the demand curve, with the market output __________ the socially optimal output.
A. right; greater than B. right; less than C. left; greater than D. left; less than
Given the prices of two goods, all quantity combinations inside the budget line are:
a. indifferent. b. efficient. c. unattainable. d. attainable.
After some tornadoes in Alabama, unemployment is low as there is a great deal of construction work and businesses run at full capacity. This suggests that
A. the economy is operating below its long-run level and living standards are less than they would have been without the hurricane. B. living standards are falling as employment and economic activity are too high. C. the economy is operating above the full-employment level and will eventually adjust back to long-run aggregate supply. D. the hurricane is beneficial since it is increasing employment and replacing less efficient capital with newer and more efficient capital.
Explain why inflation is a way for governments to default on a portion of the debts they owe.
What will be an ideal response?