1What is the short-run effect of a decrease in exports of Australian iron ore on the Australian economy?

The economy would enter the recessionary part of the business cycle.

The economy would enter the expansionary part of the business cycle.

The economy stays at its potential output level but with higher inflation.

The economy stays at its potential output level but with lower inflation.

2An upward-sloping SRAS, i.e. a positive relationship between inflation and output in the short run, is mainly due to

the state of technology.

the state of human capital.

the level of capital stock.

the equilibrium level of employment in the labour market.

3The marginal cost (MC) curve of a supplier will intersect the average total cost (ATC) curve

at the ATC's minimum point.

as the ATC is decreasing.

as the ATC is increasing.

None of the above.

4Suppose a negative externality exists. If transactions costs are low and all parties are willing to negotiate, then, according to the Coase theorem

a solution can be reached only if property rights are given to the victims of pollution and not the polluters.

a solution can be reached only if property rights are given to polluters and not to the victims of pollution.

an efficient solution can be reached regardless of the initial assignment of property rights.

an equitable solution can be reached regardless of the initial assignment of property rights.

5The Price Elasticity of Demand measures the percentage change in ________ resulting from a 1% percentage change in _______.

price; quantity demanded

quantity demanded; price

quantity demanded; income

income; quantity demanded