For a given level of inflation, if bright prospects for the future of the economy cause businesses to increase their investment in new capital, then the ________ shifts ________.
A. aggregate demand curve; left
B. short-run aggregate supply line; downward
C. aggregate demand curve; right
D. short-run aggregate supply line; upward
Answer: C
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Refer to Figure 2-9. What is the opportunity cost of producing 1 snow cone in Greenland?
A) 2/3 of a popsicle B) 5/6 of a popsicle C) 1 1/5 popsicles D) 200 popsicles
If the market price for a competitive firm's output doubles then
A) the profit maximizing output will double B) the marginal revenue doubles C) at the new profit maximizing output, price has increased more than marginal cost D) at the new profit maximizing output, price has risen more than marginal revenue E) competitive firms will earn an economic profit in the long-run.
The prices of certain goods, such as ice and gasoline, often increase after a natural disaster such as a hurricane. The economic explanation for this observation is that
A) people panic in disaster situations. B) disasters bring out the worst in people. C) the disaster temporarily reduces the supply of the goods and increases the demand for the goods. D) the disaster temporarily reduces the supply of the goods and reduces the demand for the goods.
The assumption that nothing changes except the variables being studied is
A) the ceteris paribus assumption. B) the rationality assumption. C) positive economic analysis. D) normative economic analysis.