A positive temporary supply side shock will:
A. increase the level of potential output in the long run.
B. decrease the price level in the long run.
C. increase the price level in the long run.
D. have no effect in the long run.
Answer: D
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As a tax increases, the excess burden from increasing the tax grows faster than the corresponding tax revenue. This is the impetus behind _____
a. lump sum taxes b. the excess burden rule c. the Ramsey rule d. placing taxes only on the most inelastic goods
For a perfectly competitive firm, in the short run, which of the following statements is true?
a. A price above minimum average variable cost, but below average total cost will produce an economic profit. b. A price below minimum average variable cost will cause the firm to shut down. c. Marginal cost is parallel to the axis showing quantity of output. d. Price is always greater than marginal revenue. e. Every firm contributes a significant amount to the total market output.
During the 2011 to 2012 period, the wage premium of union workers, when compared to similar nonunion workers, was approximately
a. 9 percent. b. 20 percent. c. 28 percent. d. 33 percent.
Using the supply and demand model, what is the best way to show the effects on the plywood market of households preparing for a hurricane? (Note: people use plywood to board up their homes to protect them from damage from a hurricane.)
A. Supply curve moved right and demand curve shifted to the left. B. Both supply and demand curves shifted to the right. C. Supply curve shifted to the right, demand curve did not shift. D. Demand curve shifted to the right, supply curve did not shift.