??Exhibit 16A-2 Macro AD/AS Models
?
?As shown in Panel (b) of Exhibit 16A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?
A. ?Competition among firms for workers increases the nominal wage and SRAS shifts rightward.
B. ?Long-run equilibrium will be established at Y1 and P2.
C. ?Long-run equilibrium will be established at Yp and P3.
D. ?Competition among unemployed workers decreases nominal wages and SRAS shifts rightward.
Answer: C
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A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?
A) It would shift outward because unemployment would be reduced. B) Nothing would happen because the nation would still have the same capabilities. C) A tradeoff would occur to replace the resources and goods destroyed. D) It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. E) It would not shift because people would get to work to replace any capital that was destroyed.
In the long run:
A. all costs are variable costs. B. all costs are fixed costs. C. variable costs equal fixed costs. D. fixed costs are greater than variable costs.
When aggregate demand meets aggregate supply in the horizontal portion of the aggregate supply curve,
A) a decrease in demand will cause prices to rise but no change in output. B) a decrease in demand will cause output to rise but no change in prices. C) a decrease in demand will cause prices to fall but no change in output. D) a decrease in demand will cause output to fall but no change in prices.
The president of which Federal Reserve Bank is always a voting member of the FOMC?
What will be an ideal response?