If aggregate expenditure in an economy equals 3,000 + 0.75Y and full employment real GDP equals 12,000, then this economy has
A. no autonomous expenditure.
B. a recessionary gap.
C. an inflationary gap.
D. no output gap.
Answer: D
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The median voter theorem states that the outcome of a majority vote
A) tends to favor the preferences of high-income individuals and ignore the median voter. B) is determined by the average consumer and producer in an economy. C) is likely to represent the preferences of the voter who is in the political middle. D) is likely to represent the preferences of society's middle-income voter.
An assumption on the LRAS curve is
A) technology remains unchanged. B) an increase in the average price level occurs. C) the economy is operating to the right of the production possibilities curve. D) labor productivity is increasing.
The social cost of a transaction is _____
a. the sum of fixed and variable costs b. the difference between the total cost and opportunity cost c. the sum of private and external costs d. the difference between the private and external costs e. the sum of fixed costs and opportunity costs
The simplest way for a monopoly to arise is for a single firm to
a. decrease its price below its competitors' prices. b. decrease production to increase demand for its product. c. make pricing decisions jointly with other firms. d. own a key resource.