One of the effects of a price floor (set above equilibrium price) is
A) a surplus.
B) higher-quality goods are produced.
C) more satisfied customers.
D) all of the above
E) none of the above
A
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Suppose the marginal propensity to consume is 0.8. A $20 billion increase in government spending shifts the IS curve
A) to the right by $100 billion. B) to the left by $20 billion. C) to the left by $16 billion. D) to the right by $2.5 billion.
The foreign exchange system that has the highest foreign exchange risk is
A) the dirty floating exchange rate. B) the fixed exchange rate. C) the floating exchange rate. D) the Bretton Woods system.
Why do the perfectly competitive firms earn only normal profits in the long run?
a. Entry or exit is barred b. Firms produce identical products c. A large number of buyers and sellers exist in the market d. Aggregate demand remains constant e. There is free entry and exit of firms
If the economy is self-regulating and current Real GDP is less than Natural Real GDP, the economy is operating __________ the natural unemployment rate and wages will __________
A) below; soon rise B) above; soon rise C) below; soon fall D) above; remain unchanged E) none of the above