When economic choice involves an adjustment to an existing situation, marginal analysis
a. has no practical applications or real-world uses
b. eliminates incorrect decisions and bad choices
c. involves comparing the additional costs and additional benefits of an activity before deciding
d. involves examining only the total costs and total benefits of an activity before deciding
e. none of the above
C
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Since the early 1980s, the real exchange rate between U.S. goods and Japanese goods has climbed, relative to the nominal exchange rate (yen/U.S. dollar). What does this imply about economic conditions in the two countries?
What will be an ideal response?
In a recessionary gap, the implications of downward wage inflexibility are that there will be
A) further leftward shifts of AD that worsen unemployment. B) no further leftward shifts of AD, allowing the shifts in SRAS to close the recessionary gap. C) no further leftward shifts of SRAS, allowing the shifts in AD to close the recessionary gap. D) no rightward shifts of SRAS, allowing for the possibility of persistent high unemployment.