Which of the following best describes a typical business cycle?
A. Economic expansions are followed by economic contractions.
B. Inflation is followed by unemployment.
C. Stagflation is followed by inflationary economic growth.
D. Trade surpluses are followed by trade deficits.
Answer: A
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Why do consumers sometimes take a while to respond to price changes?
(A) Consumers need time to decide whether the good is a luxury or a necessity. (B) Price changes do not affect consumers. (C) Demand sometimes becomes less elastic over time. (D) Consumers cannot find acceptable substitutes immediately.
Which of the following is true for a typical firm in a typical cartel?
a. "I can never do better for myself than by following agreed-upon cartel policies." b. "If everyone cheats, I'm better off, and so is everyone else in the cartel." c. "If I alone cheat, I'm better off; if everyone cheats, I'm worse off." d. "If I suspect others are planning to cheat, I'll do best for myself by refraining from cheating."