Exhibit 4-3 Supply and demand curves
Initially the market shown in Exhibit 4-3 is in equilibrium at P2, Q2 (E2). Changes in market conditions result in a new equilibrium at P2, Q4 (E4). This change is stated as a(n):
A. increase in supply and an increase in demand.
B. increase in supply and a decrease in demand.
C. decrease in demand and a decrease in supply.
D. increase in demand with supply held constant at S2.
Answer: A
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Keynesian theory is based on the hypothesis that
A) full employment is automatically attained in any economy. B) saving is influenced primarily by the interest rate. C) saving and consumption are influenced primarily by real current disposable income. D) planned savings equal planned investment only at full employment.
A major characteristic of structural unemployment that differentiates it from frictional unemployment is that structural unemployment
A) exists only during a recession. B) exists in an expansion whereas there is no frictional unemployment in an expansion. C) is a short-term problem. D) usually lasts longer than frictional unemployment.