The IS curve has a positive slope because a(n) __________ in the interest rate leads to a(n) __________ in desired investment and this leads to an increase in GDP
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
C
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Logrolling would allocate resources efficiently if everyone could participate. List and explain two reasons why we do not see logrolling in general elections
What will be an ideal response?
The free rider problem suggests that a producer will tend to:
a. produce more than the optimal quantity of a public good b. produce less than the optimal quantity of a public good. c. produce the optimal quantity of a public good if it is funded out of tax revenue. d. do none of the above.
If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?
a. It will increase. b. It will decrease. c. It will be unchanged in both countries. d. It will rise in one country and fall in the other, but the total is unchanged. e. Uncertain; economic theory has no answer to this question.
Consider a broom factory that permanently closes because of foreign competition. If the broom factory's workers cannot find new jobs because their skills are no longer marketable, then they are classified as:
A. seasonally unemployed. B. frictionally unemployed. C. structurally unemployed. D. cyclically unemployed.