To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
You might also like to view...
When considering the factor distribution of income, into whose income would corporate profits be included?
A. Owners of physical capital B. Workers. C. Proprietors D. Owners of human capital
An external shock such as a foreign country's devaluation will shift the
A. LM curve to the right. B. LM curve to the left. C. FE curve to the right. D. FE curve to the left.
Which of the following is TRUE for a firm in the long run?
A. Variable costs will initially increase and then decrease. B. All costs are variable costs. C. The law of diminishing marginal product holds. D. Variable costs will equal marginal cost at all output levels.
Refer to Scenario 9.7 below to answer the question(s) that follow. SCENARIO 9.7: Julio borrowed $80,000 from his great aunt to open a coffee stand at a local flea market. He agrees to pay his great aunt a 5% yearly return on the money she lent him. His other yearly fixed costs equal $16,000. His variable costs equal $60,000. He sold 50,000 cups of coffee during the year at a price of $3.00 per cup.Refer to Scenario 9.7. Julio's total revenue is
A. $60,000. B. $80,000. C. $100,000. D. $150,000.