Question

1) One reason why economists often appear to disagree when asked about the impact of some macroeconomic policies is that

Select one:

a. they do not understand the economy very well

b. economics is a very difficult science, and so there are many incorrect economic projections being made

c. economists rarely disagree; people just think they are disagreeing because they do not understand the language of economics

d. economists often appear to be disagreeing when one is talking about long-run impact while the other is referring to short-run impacts

e. economists are by nature competitive individuals and they often disagree

2) If a demand shock causes an economy to operate at a point above potential GDP, then

Select one:

a. the aggregate supply curve will shift to return the economy to the original point of equilibrium

b. the economy will correct itself through rising wages and prices

c. this short-run equilibrium point will become the new long-run equilibrium GDP

d. the economy will correct itself through falling wage rates and prices

e. the shock is said to be a negative demand shock

3)If a firm bakes cookies and sells them for $900 while spending $150 on sugar, $250 on chocolate, $100 on other supplies, $100 on wages and $200 on rent, what is its value added?

Select one:

a. $100

b. $200

c. $300

d. $400

e. $500

Answer 1