Given the expected price level, policies for reaching potential GDP will work best if the money supply is:
a. large, so that prices at potential GDP are below expectations and people can afford to buy enough goods to support the natural level of employment.
b. large enough, so that prices at potential GDP are above expectations and firms can afford to hire workers.
c. small, so that prices at
potential GDP are below expectations and people can afford to buy enough goods to support the natural level of employment.
d. small, so that prices at potential GDP are above expectations and firms can afford to hire the workers.
e. exactly the size that makes prices equal to the prices people expected to prevail.
e
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Some people choose to live close to the city center; others choose to live away from the city and take a longer commute to work every day. Does picking a location with a longer commute imply a failure to optimize?
What will be an ideal response?
The income effect describes the:
A. increase in the quantity of labor supplied in response to a higher wage. B. decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income. C. decrease in the quantity of labor supplied in response to a lower wage. D. increase in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
Which form of business organization creates a separate legal being?
a. partnerships and proprietorships b. only proprietorships c. only partnerships d. only corporations e. corporations and partnerships
Excess capacity implies:
A. Productive inefficiency B. Allocation inefficiency C. Productive efficiency D. Allocation efficiency