The economy’s self-correcting mechanism tends to push the unemployment rate back to a specific rate of unemployment. How?
What will be an ideal response?
If the economy is facing a recessionary gap, then it results in (a) equilibrium output, which will be below potential GDP, and (b) the economy will have industrial capacity and unsold output, so the inflation will be under control. At the same time, the availability of unemployed workers’ eager for jobs will reduce wages as well as the cost of production. These lower costs, in turn, stimulate greater production, and unemployment will be back on its long-run level, that is, natural rate of unemployment. The same process will work in the opposite direction if the economy is facing inflationary gap.
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Which of the following is the best explanation for why individuals own small businesses?
A. To gain experience for their next job. B. Because they cannot earn a living working for corporate America. C. The expectation of profit. D. To provide a product consumers want.
A tax increase is usually borne
A. entirely by the seller. B. entirely by the buyer. C. partially by the seller and partially by the buyer.
Unique Creations has a monopoly position in magnometers. If the marginal cost for a magnometer is $50 and the price elasticity for magnometers is -4, what is the optimal monopoly price?
a. $37.50 b. $41.25 c. $66.67 d. $75.00 e. $82.50
The productivity growth rates of richer countries tend to be ____ than those of poorer countries.
A. higher B. lower C. increasing faster D. decreasing faster