#1
In the short-run, which factor is fixed?
Both labor and capital
ExplanationIn the short-run, both labor and capital are fixed factors of production.
#2
What is the primary focus of short-run economic analysis?
Temporary fluctuations
ExplanationShort-run economic analysis primarily focuses on studying temporary fluctuations in the economy.
#3
Which of the following is a characteristic of the short-run production function?
Variable input proportions
ExplanationThe short-run production function exhibits variable input proportions.
#4
Which of the following is a key assumption in the short-run aggregate supply curve?
Sticky prices and wages
ExplanationThe short-run aggregate supply curve assumes sticky prices and wages.
#5
In short-run macroeconomic models, what does the Phillips curve illustrate?
The relationship between inflation and unemployment
ExplanationThe Phillips curve illustrates the relationship between inflation and unemployment in short-run macroeconomic models.
#6
What is the primary goal of monetary policy in the short-run?
Stabilizing prices
ExplanationThe primary goal of monetary policy in the short-run is to stabilize prices.
#7
What is the relationship between marginal cost and average variable cost in the short-run?
Marginal cost is greater than average variable cost
ExplanationIn the short-run, marginal cost is greater than average variable cost.
#8
What is the concept of 'sticky prices' in short-run economic dynamics?
Prices that adjust slowly to market changes
ExplanationSticky prices in the short-run refer to prices that adjust slowly to market changes.
#9
What is the significance of the liquidity trap in short-run macroeconomic analysis?
Interest rates become ineffective in stimulating the economy
ExplanationIn a liquidity trap, interest rates are ineffective in stimulating the economy.
#10
What role does the concept of 'menu costs' play in short-run economic analysis?
Costs of changing prices and wages
ExplanationMenu costs in short-run economic analysis refer to the costs of changing prices and wages.
#11
What is the concept of 'crowding out' in short-run economic dynamics?
A decrease in private investment due to government borrowing
ExplanationCrowding out in short-run dynamics refers to a decrease in private investment due to government borrowing.