An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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If the desired reserve ratio is 3 percent and deposits totaled $575 billion, banks would hold
A) $534.75 in reserves. B) $17.25 billion in excess reserves. C) $1,725 billion in currency. D) $17.25 billion in reserves.
In the long run an increase in the money supply causes the price level to __________. The price level moves in this direction because an increase in the money supply creates __________ in the money market that causes people to ________ spending
Fill in the blank(s) with correct word
Banks
A. have no role in the money creation process and never have. B. have no role in the money creation process, though they once did. C. create money because they take deposits and make loans. D. create money because they are the ones that print it.
In Figure 12.6, airline Fly Smart is initially a secure monopoly between two cities X and Y at point M, serving 300 passengers per day at the profit maximizing price of $300 per ticket. What is Fly Smart's profit per ticket?
A. $200 B. $120 C. $80 D. $0