Suppose the economy starts off producing Natural Real GDP. Next, aggregate supply rises, ceteris paribus. As a result, the price level falls 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 supply rose).
C) lower than it was originally (before aggregate supply rose).
D) equal to what it was originally (before aggregate supply rose).
D
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One of the disadvantages of a fixed exchange rate system is: a. too much stability in exchange rates
b. import and export industries forego the benefits of highly variable exchange rates. c. that to maintain fixed exchange rates, nations must give up control of their monetary policies. d. None of the above are disadvantages of a fixed exchange rate system.
According to the No Marginal Improvement Principle, if X* is the best choice then at X* it must always be true that:
A. either MB = MC or the activity X is not finely divisible. B. either MB ? MC or the activity X is not finely divisible. C. either MB < MC or MB > MC. D. MB = MC.
Which statement is true?
A. Scarcity is simply a lack of money. B. The United States' society has been so affluent in the last 50 years that scarcity is only a minor problem. C. The economic problem refers to the problem of poverty. D. If scarcity did not exist there would be no need to economize.
Under a progressive income tax, the average tax rate
A. decreases as income increases. B. remains constant at all levels of income. C. increases as income increases. D. initially decreases, then increases, as income increases.