If there are steady decreases in aggregate supply, the economy will experience
A. an expansionary gap.
B. demand-side inflation.
C. a slow decrease in price levels.
D. supply-side inflation.
Answer: D
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People who attend college for four years in order to equip themselves to earn higher incomes in later life are
A) discounting the future at a higher rate than do people who don't attend college. B) giving up future satisfaction for the sake of current satisfaction. C) ignoring the fact that future income has less value than current income. D) investing in human capital. E) revealing a high rate of time preference.
If the market price rises from P0 to P2 in the above figure, then there is a
A) surplus equal to the distance Q0, Q2. B) surplus equal to the distance Q1, Q2. C) shortage equal to the distance Q0, Q2. D) shortage equal to the distance Q1, Q2.