Cyclical unemployment:
a. causes unemployment statistics to be understated.
b. causes unemployment statistics to be overstated.
c. occurs because of recessions.
d. occurs because of technological innovations in production.
e. only occurs with a zero inflation rate.
c
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The short-run aggregate supply curve is most likely to shift to the right if ________.
A. productivity decreases B. input prices decrease C. wages increase D. sales taxes increase
Goods are ________ when the income elasticity of demand is less than zero
A) substitutes B) complements C) inferior D) elastic E) normal
A price ceiling does NOT lead to a deadweight loss if ________
A) the equilibrium market price lies below the price ceiling B) the equilibrium market price lies above the price ceiling C) the price elasticity of market demand is greater than 1 D) the price elasticity of market supply is greater than 1
In the late 1990's, the Wall Street Journal suggested that the stock market is grossly undervalued even while it is breaking all time records monthly. Its argument was that the risk factor of stock was being reduced dramatically due to increased stability in the economy and the prospects for continued long-term growth. Illustrate how this assumption about the economy leads to a rational bidding up of stock prices.
What will be an ideal response?