When the economy suffers a temporary negative supply shock and the monetary policy makers try to stabilize economic activity in the short run, then
A) aggregate demand curve shifts rightward.
B) output will be at its potential.
C) inflation rate will be higher.
D) all of the above.
E) both A and B.
D
You might also like to view...
Dryden Press can produce 10,000 textbooks using 10 machines and 100 workers or using 5 machines and 300 workers. It can produce 20,000 textbooks using 10 machines and 300 workers or 5 machines and 600 workers. Construct a two-dimensional contour-type graph to show the relationship between the output of textbooks and the labor and machinery inputs.
What will be an ideal response?
The quantity demanded of a good or service is the quantity that a consumer
A) is willing to buy at a particular price during a given time period. B) actually buys at a particular price during a given time period. C) needs to buy at a particular price during a given time period. D) should buy at a particular price during a given time period.
According to efficiency wage theory, a firm that raises wages by one percent will actually lower the labor cost per unit of output if the wage increase
A) raises output per worker by more than one percent. B) raises output per worker by less than one percent. C) does not change output per worker. D) lowers output per worker by less than one percent.
When demand is elastic, the absolute number for price elasticity will be
A. Equal to 1. B. Greater than 0. C. Greater than 1. D. Less than 1.