If the price of inputs rises and consumer expectations about future economic activity worsens:
a. Aggregate demand rises, but aggregate supply does not change.
b. Aggregate demand falls, and aggregate supply rises.
c. Aggregate demand and aggregate supply rise.
d. Aggregate demand and aggregate supply fall.
e. None of the above.
.D
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
The combined effect of a real wage increase is that
A) the income effect always dominates, leading to fewer hours worked at a higher wage. B) the substitution effect always dominates, leading to more hours worked at a higher wage. C) if the substitution effect outweighs the income effect, the labor supply curve slopes downward, but if the income effect outweighs the substitution effect, the labor supply curve slopes upward. D) if the substitution effect outweighs the income effect, the labor supply curve slopes upward, but if the income effect outweighs the substitution effect, the labor supply curve slopes downward.
Which of the following addresses agency costs?
a. spot checks of the quality of employee work b. hiring only from job fairs c. instituting longer work days d. reducing the number of holidays
Income inequality is
A. Often greatest in the poorest countries. B. An issue because households in the lowest quintile receive more than their share of income. C. Often greatest in the richest countries. D. Not an issue in the United States because of the redistribution of income through the federal tax system.