If the prices of inputs change, what will happen to the aggregate supply curve?
A. The aggregate supply curve does not move, but the economy moves along the curve.
B. The aggregate supply curve depends on whether the input prices rise or fall.
C. The curve will become flatter or steeper depending on whether the input prices rise or fall.
D. The aggregate supply curve shifts inward or outward depending on whether the input prices rise or fall.
Answer: D
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In sequential games, the player who moves first:
A. sometimes has an advantage and sometimes has a disadvantage. B. has a first-mover advantage only when he or she is able to make a credible threat or promise to choose a dominated strategy. C. always has a first-mover advantage. D. has a first-mover advantage only when the second mover fails to choose the dominant strategy.
The fact that it takes time for government to take action, even after a problem has been diagnosed, is one reason for the occurrence of
A) inside lags. B) the multiplier effect. C) outside lags. D) crowding out.
The currently used method for calculating the CPI
A) accounts for people increasing consumption of a good that falls in relative price. B) probably overstates inflation by about 1 percentage point. C) has no effect on government expenditures. D) None of the above answers are correct.
Holding all other factors constant, the quantity demanded of an asset is
A) positively related to wealth. B) negatively related to its expected return relative to alternative assets. C) positively related to the risk of its returns relative to alternative assets. D) negatively related to its liquidity relative to alternative assets.