The long-run aggregate supply curve is vertical at 10 trillion, but the short-run aggregate supply ...

The long-run aggregate supply curve is vertical at 10 trillion, but the short-run aggregate supply curve intersects the aggregate demand curve at 12 trillion. From this, we know that
 
  A) the economy is operating below full capacity in the short run, and will have to adjust by hiring more workers, thus reducing unemployment.
  B) the price level is too high. The only way long-run equilibrium can be restored is to lower the price level.
  C) adjustments will have to occur so that the long-run aggregate supply equals 12 trillion.
  D) adjustments will have to occur so that the short-run aggregate supply intersects the aggregate demand curve at 10 trillion.

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Ques. 2

A political function of government is to
 
  A) encourage the consumption of government-sponsored goods.
  B) provide public goods.
  C) correct for externalities.
  D) encourage the workings of the price system.

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Ques. 3

Which of the following is a possible outcome of setting a legal maximum rental rate below the market clearing rental rate?
 
  A) an increase in the quantity of rental housing supplied
  B) a decrease in the quantity of rental housing demanded
  C) a black market in rental housing
  D) a surplus of rental housing

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Ques. 4

Assume that there was a 5 percent increase in the price of all goods in 2015; if the base year is 2014, then the price index in 2015 will be
 
  A) 95.
  B) 105.
  C) 110.
  D) 1100.

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Ques. 5

Which of the following does NOT involve transfers in kind?
 
  A) public housing
  B) food stamps
  C) Medicare
  D) salaries of government employees

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Ques. 6

Under rate-of-return regulation, the price is set so that
 
  A) price equals the marginal cost of production.
  B) the firm earns a positive economic profit.
  C) the firm earns a monopoly profit.
  D) the firm earns a normal rate of return on investment.

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Ques. 7

In the above figure, this profit-maximizing monopolistic competitive firm will realize an economic profit of
 
  A) -1,400.
  B) 2,100.
  C) 1,400.
  D) 700.

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Ques. 8

An increase in the price of steel to producers of refrigerators will cause
 
  A) the quantity demanded for steel to increase.
  B) the demand for refrigerators to decrease.
  C) the quantity supplied of refrigerators to increase.
  D) the supply curve for refrigerators to shift left.

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Ques. 9

Who benefits primarily from rent controls?
 
  A) construction workers
  B) poor people looking for low-income housing
  C) all who want to rent
  D) only renters who are able to get units at below-market rates