Refer to Figure 11.2. Assume the economy is in equilibrium at 1, where real GDP equals potential GDP, and then the economy experiences a positive demand shock. Other things equal, the positive demand shock is best represented by a(n)
A) movement up along the Phillips curve.
B) movement down along the Phillips curve.
C) upward shift of the Phillips curve.
D) downward shift of the Phillips curve.
A
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Markets tend to overproduce goods that generate external costs.
Answer the following statement true (T) or false (F)
The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the:
A. output-maximizing rule. B. profit-maximizing rule. C. shut-down rule. D. break-even rule.
Assuming the Marshall-Lerner condition holds and using the ZZ/Y and NX graphs, illustrate graphically and explain what effect a real depreciation will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria
What will be an ideal response?
Assume it takes 5 units of labor to produce 10 units of output. When the price of labor is $5 per unit and fixed costs equal $100, what is the total cost of those 10 units of output?
A. $125 B. $150 C. $600 D. $500