Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an
What will be an ideal response?
increase in the quantity of A demanded and a decrease in the demand for B.
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Which of the following "costs" could a firm that wants to remain in business avoid if it halted current production?
A. Opportunity costs B. Variable costs C. Fixed costs D. Sunk costs
In economics, money refers to
A. currency. B. income. C. assets used and accepted as payment. D. wealth.
Answer the following statements true (T) or false (F)
1. The policy implication of the long-run Phillips Curve is that, while stimulative policies may work to reduce unemployment in the short run, the only effect of such policies in the long run is to raise inflation. 2. Based on the long-run Phillips Curve, any rate of inflation is compatible in the long run with the natural rate of unemployment. 3. The adjustment mechanism that brings the economy to its long-run aggregate supply has to do with inflation-expectations, whereas the adjustment to the long-run Phillips curve has to do with wage flexibility. 4. Supply-side economists contend that aggregate supply is the relevant policy factor in influencing the price level and real output in an economy. 5. Supply-side economists recommend higher marginal tax rates to increase aggregate supply and real output.
"Depression means idleness. And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the:
A. Consequences of the hyperinflation that accompanies a recession B. Reasons for the natural rate of unemployment C. Noneconomic costs of unemployment D. Characteristics of structural unemployment