Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A
B. Falling; A; C
C. Falling; B: C
D. Rising; A; C
Answer: B
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How much a country's economy will produce at its potential output is also called: a. the trough of the business cycle. b. its economic welfare
c. the trend line. d. the natural rate of output.
The Permanent Income and Life-Cycle Hypothesis imply that
A. the primary determinant of current consumption is permanent income. B. the primary determinant of permanent income is current consumption. C. consumers generally favor current consumption over future consumption. D. consumers are more likely to save if they are uncertain about the future.
Automatic stabilizers are ______.
a. too weak to stop a significant recession b. effective only during a severe recession c. subject to significant implementation lags d. less effective than fiscal policy in a normal economy
Recall the Application about the impact tariffs have on lower income households to answer the following question(s). Economists have found that tariffs in the United States fall most heavily on lower-income consumers. In the United States, tariffs are very high on textiles, apparel items and footwear, and within these categories the highest tariffs fall on the cheapest products. In general, to protect U.S. industries, tariffs are highest on labor-intensive goods.According to this Application, tariffs in the United States are very high on textiles, apparel items and footwear. These tariffs disproportionately impact lower-income households because:
A. lower-income households tend to purchase more of these items than do higher-income households. B. these products represent a higher fraction of consumption of lower-income households than higher-income households. C. the tariffs are only applicable to lower-income households. D. higher-income households tend to purchase products produced in the United States, which are not subject to tariffs.