Refer to the above figure. Suppose that the economy was originally at point A, and then it reached point C by means of a fiscal policy action. Which of the following is correct?
A) Point C is both a short-run equilibrium and a long-run equilibrium that could have been attained through an increase in government spending.
B) Point C is a short-run equilibrium that could have been attained through a reduction in government spending, but in the long run the economy will end up at point B.
C) Point C is a short-run equilibrium that could have been attained through a tax cut, but in the long run the economy will end up at point B.
D) Point C is a long-run equilibrium that could have been attained through a tax increase, although reaching this point first required a short-run equilibrium at point B.
C
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Total surplus in a market will increase when the government
a. imposes a tax on that market. b. imposes a binding price floor on that market. c. removes a binding price ceiling from that market. d. None of the above is correct.
Fast food chains often behave like
A. cartels. B. covert colluders. C. open colluders. D. cutthroat competitors.
Unemployment benefits tend to be:
A. more generous in Europe, and this leads to fewer and shorter spells of unemployment. B. more generous in Europe, and this leads to more and longer spells of unemployment. C. less generous in Europe, and this leads to more and longer spells of unemployment. D. less generous in Europe, and this leads to fewer and shorter spells of unemployment.
The economy experiences an increase in the price level and an increase in real domestic output. Which is a likely explanation?
a. The stock of capital has increased b. Interest rates have increased c. Net exports have increased d. Wage rates have fallen