When an economy is temporarily operating at an output that is beyond its full-employment rate,
a. excess supply in resource markets will eventually lead to lower resource prices, which will decrease costs and direct the economy toward full employment.
b. excess demand in resource markets will lead to higher resource prices, which will increase costs and direct the economy toward full employment.
c. lower wages and prices will quickly restore full employment.
d. only restrictive fiscal policy will direct the economy back to full employment.
B
You might also like to view...
The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because
A) producers cannot measure marginal social cost. B) producers do not pay the external cost. C) the general public does not care about external costs. D) external costs are not a political issue. E) the external cost is paid by consumers rather than producers.
Net exports of goods and services increase when
A) exports of goods and services decrease and imports of goods and services do not change. B) consumption expenditure increases. C) exports of goods and services increase and imports of goods and services do not change. D) consumption expenditure decreases. E) imports of goods and services increase and exports of goods and services do not change.