In the mid-1970s, changes in oil prices greatly affected U.S. inflation. When oil prices rose, the U.S. would experience:
A. Cost-push inflation and rising output
B. Demand-pull inflation and rising output
C. Cost-push inflation and falling output
D. Demand-pull inflation and falling output
C. Cost-push inflation and falling output
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Suppose the government increases government purchases and there is some crowding out. As a result
A) the rightward shift of the aggregate demand curve due to increased government purchases is reinforced by the crowding out effect. B) the rightward shift of the aggregate demand curve due to increased government purchases is offset to some degree by the crowding out effect. C) the rightward shift of the aggregate demand curve due to increased government purchases is completely offset by the crowding out effect. D) the aggregate demand curve shifts right due to increased government purchases and the short- run aggregate supply curve shifts left due to the crowding out effect.
Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5 . If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would
a. decrease by $10. b. increase by $40. c. decrease by $30. d. increase by $10. e. not change.