If leakages are greater than injections, equilibrium output will be
A. Less than full-employment output, and an inflationary gap will occur.
B. More than full-employment output, and an inflationary gap will occur.
C. More than full-employment output, and a recessionary gap will occur.
D. Less than full-employment output, and a recessionary gap will occur.
Answer: D
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Assume that firms in a perfectly competitive market are earning economic profits. Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market?
A) The short-run market supply curve shifts to the right, causing price to fall and total market output to increase. B) The short-run market supply curve shifts to the left, causing price to rise and total market output to decrease. C) The market demand curve shifts to the left, causing price to fall and market output to decrease. D) The market demand curve shifts to the right, causing price to rise and market output to increase.
In New York, a welfare recipient can earn $90 per month without having her benefits reduced. Beyond $90, benefits are reduced by 57 cents for every dollar of earnings. Consider Jackie, a resident of New York, who can earn $10 per hour. If she does not work at all, she is eligible for welfare benefits of $577.
(A) If she works 10 hours, how much are her work earnings, how much is her welfare benefits, and how much is her total income? (B) After Jackie works a certain number of hours, she does not receive any benefits at all. What is that number of hours?