The aggregate supply curve will be vertical when
a. output can be increased without an increase in the price level
b. the economy is operating at full-employment capacity
c. output and price level rise together
d. the aggregate demand curve shifts to the left
e. aggregate demand is absent
B
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A shortage tends to put ________ pressure on the price of the product, which ________ the quantity supplied
A) upward; increases B) upward; decreases C) downward; increases D) downward; decreases
When monetary equilibrium occurs,
A) the demand for final goods and services equals the supply of final goods and services. B) gross business investment falls to zero. C) relative prices remain constant. D) the quantity supplied of money equals the quantity demanded.
Gross investment
A) is the purchase of new capital. B) includes only replacement investment. C) does not include additions to inventories. D) Both answers A and B are correct.
Consider a competitive market in which people consume at the point where their marginal rates of substitution between products X and Y are 3/5
In this same market, producers produce where their marginal rates of transformation between X and Y are also 3/5. However, producers are producing 7 of Y and 3 of X, and consumers wish to consume 5 of Y and 5 of X per unit of time. Explain how this situation can exist. Also determine if it represents an equilibrium or not. If not an equilibrium, what will tend to happen in the market?