If the aggregate supply curve has its normal shape, deficit spending will increase
a. both GDP and the price level at about the same rate.
b. the price level before it increases real GDP.
c. the price level but decrease real GDP.
d. real GDP before it increases the price level.
d
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Alice and Gene work in the mailroom, sorting and delivering mail. In order for them to benefit from specialization and trade, Alice must
A) be able to both sort and deliver faster than Gene. B) be equally productive in both sorting and delivering. C) have a comparative advantage in both sorting and delivering. D) have a comparative advantage in one task and Gene must have a comparative advantage in the other task. E) be equally productive as Gene in both sorting and delivering.
In the presence of asymmetric information, a hire contract
A) achieves production efficiency. B) can lead to opportunistic behavior on the part of the agent. C) is impossible to write. D) will result in the principal earning all of the profit.