Which of the following changes shifts the SRAS curve up?
A. A decrease in the labor force
B. An increase in government purchases
C. A decrease in the money supply
D. An increase in firms' costs
Answer: D
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In the context of the global economy, the United States' capacity utilization rate __________________ than it was just a few decades ago.
A. is much more important B. is much less important C. has the same importance
New Keynesian theorists argue that
A) price and wage adjustments in response to policy changes often overcompensate and cause further price disruptions. B) prices and wages may not be free to adjust in response to policy changes. C) unions and big business have considerable power and often choose not to change wages and prices so as to deliberately offset policy changes enacted by the government. D) the Fed and the Congress rarely do what they say they will do, so one should never listen to what they say. E) new classical rational expectations theories about how expectations are formed are completely wrong.
Refer to the budget line shown in the diagram. If the consumer's money income is $20, which of the following combinations of goods is unattainable?
A. 4 units of C and 6 units of D.
B. 5 units of C and no units of D.
C. 1 unit of C and 8 units of D.
D. 2 units of C and 6 units of D.
With respect to labor supply, the substitution effect takes account of the point that at higher wage rates
A) a person can afford to take more leisure. B) leisure has become less expensive and so a person consumes less leisure. C) there are no factors inducing a person to work less. D) leisure has become more expensive and so a person consumes less leisure.