A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:
A. availability of inputs.
B. flexibility of the production process.
C. adjustment time.
D. whether the good is a luxury or a necessity.
C. adjustment time.
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Suppose the economy is initially operating at full employment. A reduction in the size of the budget deficit will cause which of the following in the long run?
A) a recessionary gap B) a reduction in real GDP C) an inflationary gap D) none of the above
The international trade effect explains that higher prices make domestic goods
a. more expensive, causing imports to rise and exports to fall b. more expensive, causing imports and exports to fall c. more expensive, causing imports to fall and exports to rise d. less expensive, causing imports and exports to fall e. less expensive, causing imports to fall and exports to rise
Which of the following is most important for the growth of income and full realization of an economy's potential?
a. a positive rate of time preference that motivates a high rate of current consumption b. low real interest rates c. the use of central planning to allocate investment funds d. a mechanism capable of attracting savings and channeling them into investment projects that create wealth
The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change
a. in the price level and output. b. in the price level, but not output. c. in output, but not the price level. d. in neither the price level nor output.