When airlines were deregulated, airfares declined by 30 percent. Deregulation is an example of political forces:
A. letting the market move toward equilibrium, reducing excess supply.
B. making the market move away from equilibrium, creating excess supply.
C. letting the market move toward equilibrium, reducing excess demand.
D. making the market move away from equilibrium, creating excess demand.
Answer: A
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When marginal cost exceeds marginal revenue,
a. marginal profit < 0. b. the firm should increase output. c. marginal profit + marginal cost > marginal revenue. d. marginal cost < marginal revenue ? marginal profit.
Allen Steel Company is considering whether to build a new mill. If the interest rate rises,
a. the present value of the returns from the mill will fall, so Allen will be less likely to build the mill. b. the present value of the returns from the mill will fall, so Allen will be more likely to build the mill. c. the present value of the returns from the mill will rise, so Allen will be less likely to build the mill. d. the present value of the returns from the mill will rise, so Allen will be more likely to build the mill.
A business cycle refers to the
A) continued expansion in Real GDP. B) recurrent swings (up and down) in Real GDP. C) continued decline in Real GDP. D) period when Real GDP grows at unusually high rates. E) none of the above
Suppose the economy is in long-run equilibrium. If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers, then in the short run,
a. real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same. b. the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected. c. the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. d. the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.