Which of the following usually results from high rates of unemployment?
a. decreased social tensions
b. increased stock prices
c. decreased political turnover during elections
d. decreased potential output of goods
d. decreased potential output of goods
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When one party suffers negative external effects due to the actions of another party, a lawsuit may not lead to the efficient outcome if:
A) property rights are not clearly assigned. B) the parties have incomplete information. C) the legal costs of the lawsuit are too high. D) All of the above
Refer to the above figure. A price support set at P3 will
A) lead to a surplus of Q3 minus Q1. B) lead to a shortage of Q3 minus Q1. C) lead to an equilibrium quantity of Q2. D) be ineffective.
Legislators argue that a minimum wage law is instituted to help poor people. Economists can attack the minimum wage law on two fronts. First, some argue that government should not help the poor. Second, some argue that minimum wage laws actually hurt the poor because it creates unemployment. Which argument is normative and which is positive?
What will be an ideal response?
Answer the following statements true (T) or false (F)
1) When there are unplanned increases in inventories, then actual investment ends up being less than planned investment. 2) If planned investment is larger than saving, then real GDP will increase as the economy adjusts towards equilibrium. 3) In a closed private economy, an unplanned decrease in inventories will cause firms to increase real GDP. 4) If the MPC in the economy is 0.7 and aggregate expenditures fall by $10 billion, then real GDP will fall by $17 billion. 5) If aggregate expenditures rise by $200 billion and real GDP consequently rises by $500 billion, then the MPC in the economy must be 0.4.