Which of the following explains why higher prices in the goods and services market will lead to an upward sloping short-run aggregate supply curve?
a. The higher prices will temporarily improve profit margins because many of the cost components of firms will be fixed in the short run.
b. The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate additional output.
c. The higher prices will expand the economy's resource base and, thereby, stimulate additional output.
d. The higher prices will improve technology and, thereby, stimulate additional output.
A
You might also like to view...
Real GDP refers to GDP adjusted:
A) for changes in ruling political party. B) for changes in tax rates. C) for changes in net imports. D) for changes in prices.
Physical or technological facts are by themselves never sufficient to measure efficiency because
A) what is efficient changes over time. B) efficiency is a ratio between evaluations. C) more complex technological processes are inevitably more efficient. D) physical or technological data can never be known precisely. E) we can never be sure we are using the most advanced technology.
Depository institutions do all the following EXCEPT
A) minimize the cost of obtaining funds. B) create liquidity. C) pool risks. D) create required reserve ratios.
The impact of crowding out may be the least
A) when real GDP is above but close to potential GDP. B) during a deep recession. C) when real GDP is below but close to potential GDP. D) during an expansion.