The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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Suppose a perfectly competitive market is in a short-run equilibrium. If some firms exit the market, the profit of the remaining firms ________; if some firms enter the market, the profit of each existing firm ________
A) decreases; is unchanged B) increases; decreases C) increases; is unchanged D) is unchanged; is unchanged E) decreases; increases
If a new and better good replaced an older and less expensive good, then the price level measured by the CPI ________
A) is lower than the actual price level B) is higher than the actual price level C) might be either higher or lower than the actual price D) is the same as the actual price level because it measures the prices of the actual goods
Explain the role of risk and uncertainty in an analysis of the economic behavior of peasant farmers. What kinds of questions does this analysis enable us to answer?
What will be an ideal response?
When job search is the explanation for unemployment, workers are searching for the jobs that best suit their tastes and skills, but when the wage is above the equilibrium level, the quantity of labor supplied exceeds the quantity of labor demanded, and workers are unemployed because they are waiting for jobs to open up
a. True b. False Indicate whether the statement is true or false