If the economy is operating on the long-run aggregate supply curve, then expansionary fiscal policy will
A) generate higher prices in the short run, but will induce aggregate supply to increase in the long run.
B) generate an increase in real GDP and higher prices in the short run, but then real GDP will decrease to its long-run level, and the price level will increase some more.
C) generate an increase in real GDP without higher prices in the short run, but then real GDP will return to its long-run level, and the price level will increase.
D) generate an increase in real GDP and higher prices in both the short run and the long run.
B
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The difference between the value of a good to sellers and its price is known as: a. consumer surplus. b. producer surplus. c. demand
d. supply.
When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in
A. the supply of this wine. B. the demand for this wine. C. the quantity of this wine demanded. D. the quantity of this wine supplied.
A buyer of a newly-issued bond
A) is a borrower of funds. B) is a lender of funds. C) is purchasing ownership in the institution that issues the bonds. D) must be a producer and not a consumer.
Answer the following questions true (T) or false (F)
1. Issuing tradable emission allowances to polluting firms will result in those firms polluting more than is socially desirable. 2. A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output. 3. The market demand curve for a perfectly competitive industry is the horizontal summation of each individual firm's demand curve.