The vertical long-run aggregate supply curve reflects the fact that in the long run, an increase in the price level
a. will not alter the economy's maximum sustainable rate of output.
b. will increase the economy's maximum sustainable rate of output.
c. will reduce the quantity of goods and services purchasers will demand.
d. will improve the overall efficiency of resource use.
A
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If the inflation rate is 5 percent and the real interest rate is 2.5 percent, then the nominal interest rate is
A) 10 percent. B) -2.5 percent. C) 2.5 percent. D) 7.5 percent. E) 2 percent.
The elasticity of demand is constant along a downward sloping straight-line demand curve
Indicate whether the statement is true or false
Which of the following provides the clearest evidence that a business firm is using resources productively?
a. economic profit b. economic loss c. high wages paid to workers d. low wages paid to workers
Michael can buy either pizzas or submarine sandwiches. If the prices of pizzas and submarine sandwiches double and Michael's money income triples, we can conclude that Michael's budget constraint will
A. shift out but remain parallel to the old one. B. remain unchanged. C. shift in but remain parallel to the old one. D. swivel in so that the slope of the budget constraint is doubled.