Use the Aggregate Supply- Aggregate Demand model to determine which of the following will lead to higher prices.
A. A fall in world oil prices
B. An increase in interest rates
C. A tax increase
D. An increase in government spending
Answer: D
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When the economy is in long-run equilibrium, there will be
A) no unemployment. B) cyclical unemployment only. C) frictional and structural unemployment. D) cyclical and seasonal unemployment.
By vertically integrating, two firms can
A) increase market share. B) avoid holdup problems. C) limit the problems inherent in moving too quickly. D) avoid antitrust issues.
Under adaptive expectations theory, people expect the rate of inflation this year to be:
a. zero, regardless of the rate last year. b. the same as last year. c. the rate based on predictable and fiscal policies. d. All of these.
The market for eyeglasses is monopolistically competitive. It follows that firms in the eyeglass industry: a. could earn economic profit in long-run equilibrium
b. could earn economic profit in short-run equilibrium. c. charge a price equal to marginal cost. d. charge a price equal to the minimum average total cost.