A relatively flat demand curve indicates that
a. quantity demanded will adjust only slightly to a price change.
b. quantity demanded will adjust significantly to a price change.
c. quantity demanded will not adjust to a price change.
d. the change in quantity demanded will exactly equal a change in price.
b
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
The prisoner's dilemma provides an explanation for
a. the price wars that sometimes occur in oligopolies b. the ability of firms in an oligopoly to extract the entire consumer surplus c. the collusive behavior that sometimes occurs in an oligopoly d. the failure of firms in non-competitive industries to maximize profits e. an irrational behavior that occurs in competitive markets
With respect to the aggregate demand curve, a tax cut will:
A. Move the economy down along the curve. B. Move the economy up along the curve. C. Shift the curve leftward. D. Shift the curve rightward.
Suppose output exceeds potential output and contractionary fiscal policy is enacted. According to the AS/AD model, in the long run, this fiscal policy will produce:
A. a lower price level than would otherwise have occurred if no action were taken. B. a lower output level and a lower price level than would have occurred if no action were taken. C. neither a lower price level nor a lower output level than would otherwise have occurred if no action were taken. D. a lower output level than would otherwise have occurred if no action were taken.