Other things the same, if the price level is higher than expected, then some firms believe that the relative price of what they produce has
a) increased, so they decrease production.
b) decreased, so they increase production.
c) decreased, so they decrease production.
d) increased, so they increase production.
Ans: d) increased, so they increase production.
You might also like to view...
In an "underground economy," the production of goods and services
A) is usually too insignificant to be included in GDP. B) is not measured but is included in GDP. C) is measured and included in GDP. D) is not measured or included in GDP.
According to real business cycle theory, the primary causes of business cycles are
A) shocks to aggregate demand. B) monetary factors. C) technology shocks. D) waves of self-fulfilling optimism and pessimism.
The demand curve for labor of Coca-Cola manufacturers will not shift to the right if:
a. d and e. b. the price of Coca-Cola increases. c. the firms innovate with new technology that raises labor productivity. d. the price of Pepsi decreases. e. Coca-Cola workers become unionized.
A difficulty with effective fiscal policy is the:
A. reality of time lags. B. guess as to what potential GDP is. C. lack of relevant information needed to decide the magnitude of change. D. All of these are true.