What shape did the short-run aggregate supply curve have during the 1930s, according to Keynes? Explain
What will be an ideal response?
Keynes argued the short-run aggregate supply curve was horizontal during the 1930s. There was substantial unemployment and excess capacity during the depression, so that shifts in aggregate demand would affect total output without affecting the price level. Keynes argued that prices and wages were inflexible, especially downward, and could not be relied upon to bring about a full-employment equilibrium.
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A pizza parlor's rent is
A) sunk in the long run. B) fixed in the long run. C) avoidable in the short run. D) variable in the short run.
One way the consumer price index (CPI) differs from the GDP chain price index is that it:
a. includes only purchases of items bought by typical urban consumers. b. uses only current year quantities. c. is based on all final goods and services. d. includes only services.
A policy of marginal-cost pricing will ensure that many regulated industries will lose money
a. True b. False Indicate whether the statement is true or false
If the economy is inflationary, the Fed would most likely:
A. increase bank reserves by raising the discount rate. B. increase bank reserves by buying government securities C. decrease bank reserves by lowering the discount rate. D. decrease bank reserves by selling government securities.