Say’s Law
a. cannot be satisfied if there is excess supply or demand in individual markets in the
long run
b. ensures that every firm will sell all of its output
c. can be satisfied even if there is a general overproduction or underproduction of goods
in the economy
d. is satisfied only if every market clears in the short run
e. shows that the total value of spending in the economy will equal the total value of the
output produced
Seemingly positive disagreements often have normative origins.
If consumption of a good by one person imposes costs on a party other than the
producer,
Statistical discrimination refers to
In the long run,
a. an increase in the federal budget deficit can lower the interest rate and investment
spending.
b. an increase in the federal budget deficit can raise the interest rate and investment
spending.
c. a decrease in the federal budget deficit can lower the interest rate and raise
investment spending.
d. a decrease in the federal budget deficit can raise the interest rate and lower
investment spending.
e. a decrease in the federal budget deficit can lower the interest rate and lower
investment spending.
The classical model’s theory of the interest rate does not apply in the short run.
If the government announces a cut in the capital gains tax and it is expected that
investment spending will increase as a result, which of the following are also likely?
a. An upward shift in the aggregate expenditure line, a rightward shift of the money
demand curve, and a leftward shift of the aggregate demand curve
b. A downward shift in the aggregate expenditure line, a rightward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
c. An upward shift in the aggregate expenditure line, a leftward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
d. A downward shift in the aggregate expenditure line, a leftward shift of the money
demand curve, and a leftward shift of the aggregate demand curve
e. An upward shift in the aggregate expenditure line, a rightward shift of the money
demand curve, and a rightward shift of the aggregate demand curve.
In the long run, there is a tradeoff between inflation and unemployment.
Refer to Figure 9-4. Which of the following policies would most likely shift the supply
of loanable funds curve from S1to S2?
a. Introduction of an investment tax credit
b. Cutting the corporate profits tax rate
c. Increasing personal income tax rates
d. Eliminating taxes on interest income
e. Decreasing the government’s budget deficit
Refer to Figure 17-1. Assume the equilibrium exchange rate is $0.008 per yen at point
A. If U.S. consumers decide to purchase more automobiles from Japan, then
a. nothing will happen
b. the supply curve will shift to S’ and the demand curve will shift to D’
c. the supply curve will shift to S’
d. the exchange will rise to $0.012 per yen
e. exchange rate will return to $0.008 as soon as the market adjusts.
Which of the following is the most liquid asset?
a. A classic art painting.
b. A commercial building.
c. A savings bond
d. A checking account balance
e. Gold
Protectionism arises because
a. people misunderstand the benefits of free trade
b. trade generally harms some groups in society
c. the costs of free trade outweigh the benefits for all groups in society
d. the costs of trade for both exporting and importing nations outweigh the benefits
e. of a lack of comparative advantage
In the long run, a monopolistically competitive firm will produce too little output to
minimize average cost. Therefore, it will have