Given AD1 and AS1 in Figure 8.3, the classical approach to achieving full employment at an output of $300 billion would be to
A. Increase the growth of the money supply to shift AD1 to AD2.
B. Do nothing and wait for "natural" market forces to achieve full employment.
C. Increase taxes and increase government spending to shift AD1 to AD2.
D. Use all available supply-side options.
Answer: B
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Refer to the figure above. If Barylia does not engage in international trade, what is the production of calculators in the country?
A) 10 units B) 20 units C) 40 units D) 60 units
The town of Harmonia gives away all 500 tickets to its annual Founder's Day Free Concert-in-the-Park to local residents
Each year, more than 500 people wish to attend the concert, so some of the residents who receive the free tickets sell them for as much as $75 each. Is a transaction where someone pays a resident $75 for a "free ticket" economically efficient? A) Yes, it was a voluntary exchange that benefited both parties. B) No, the buyer paid too much for the ticket. C) No, people should never be allowed to sell items they received for free. D) Yes, but it is efficient only from the perspective of the seller and not from the perspective of the buyer.