Assuming the economy represented in the graph shown is currently at point B, if the government does nothing, then eventually:
A. SRAS will shift left, and the economy will experience stagflation.
B. SRAS will shift to the right, and the economy will have Y3 output with lower prices.
C. LRAS will shift left, until lower equilibrium output is reached with lower prices.
D. the entire economy will collapse.
Answer: B
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Economists make the general assumption that:
A. people are rational, but their behavior doesn't always follow this assumption. B. people are irrational, but there are some correlations in behavior that have been proven. C. people are rational, but this doesn't really ever resemble reality. D. people are irrational, but this is too difficult to put into a model.
Markets in which the behavior of the firms theoretically leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers are
a. monopolistic competition and oligopoly. b. monopoly and oligopoly. c. monopolistic competition and monopoly. d. perfect competition and perfectly contestable.
When the price of a good falls, marginal utility per dollar spent on that good ________, prompting consumers to purchase ________ of that good.
A. rises; less B. rises; more C. falls; less D. falls; more
The level of the capital—labor ratio that maximizes consumption per worker in the steady state is known as the
A) Solow residual capital—labor ratio. B) Golden Rule capital—labor ratio. C) q theory capital—labor ratio. D) dynamically efficient capital—labor ratio.