A positive temporary supply side shock will:
A. increase the level of potential output in the long run.
B. decrease the price level in the long run.
C. increase the price level in the long run.
D. have no effect in the long run.
Answer: D
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If workers and firms raise their inflation expectations,
A) unemployment will fall. B) the short-run Phillips curve will be vertical. C) the short-run Phillips curve will shift upward. D) actual inflation will fall to match expected inflation.
The fact that travel on buses fell as incomes increased in many cities suggests that
a. bus travel is a normal good b. the law of demand does not apply to bus travel c. bus travel is an inferior good d. there are no good substitute goods for bus travel
Why does the United States have more banks than most other highly industrialized countries?
What will be an ideal response?
Whether real seignorage revenue increases when the rate of money growth increases depends on whether
A. the rise in inflation outweighs the decline in real money holdings. B. the rise in the real supply of currency outweighs the decline in inflation. C. the rise in inflation ratio outweighs the decline in the real supply of currency. D. the rise in real money holdings outweighs the decline in inflation.