Refer to the graph below. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. If cost-push inflation occurs and the government subsequently implements expansionary policy, then the effect of such policy is to shift:
A. AD1 to AD2, which increases the price level from P1 to P2, and increases real domestic output from Q3 to Q2
B. AS1 to AS2, which increases the price level from P1 to P2, and decreases real output from Q1 to Q2
C. AD1 to AD2, which increases the price level from P2 to P3, and increases real output from Q2 to Q1
D. AS2 to AS3 which increases the price level from P2 to P3, and decreases real output from Q2 to Q3
C. AD1 to AD2, which increases the price level from P2 to P3, and increases real output from Q2 to Q1
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The demand for houses decreases, all else equal, when
A) wealth increases. B) real estate prices are expected to increase. C) stock prices become more volatile. D) gold prices are expected to increase.
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then demand is:
A. elastic. B. inelastic. C. unitary elastic. D. horizontal.
A growing economy can result in
A. less access to communication technology. B. less government corruption. C. a higher incidence of malnutrition. D. fewer newborn deaths.
Compare two markets. In one market, the HHI is 500, in the other market the HHI is 1,500. What must be true of these two markets?
A. The firms in the market in which the HHI is 1,500 have greater market power than do the firms in the market in which the HHI is 500. B. There are more firms in the market in which the HHI is 1,500 than in the market in which the HHI is 500. C. The firms in the market in which the HHI is 1,500 have less market power than do the firms in the market in which the HHI is 500. D. The market in which the HHI is 500 is, by definition, an oligopoly but the market in which the HHI is 1,500 is not an oligopoly.