If firms make a profit in the short run, firms will exit the market in the long run.
Answer the following statement true (T) or false (F)
False
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According to the AS-AD model,
A) the equilibrium is where the AS curve crosses the AD curve, but the amount of real GDP at this point is not always equal to potential GDP. B) the aggregate quantity supplied is typically greater than the aggregate quantity demanded, thereby leading to unemployment. C) the aggregate quantity demanded is typically greater than the aggregate quantity supplied, thereby leading to inflation. D) changes in the amount of potential GDP is the only factor that shifts both the aggregate supply curve and the aggregate demand curve. E) the AS curve is always equal to potential GDP.
The one main difficulty with a nominal GDP target rule for monetary policy is that it
A) is a difficult target to hit. B) provides no nominal anchor. C) requires a painful extinguishing response to an adverse supply shock. D) performs badly when there is unstable velocity.
According to the convention followed in the text, "money" consists all of the following except
a. coins. b. credit cards. c. checkable deposits. d. paper money.
Which of the following does purchasing-power parity conclude should equal 1?
a. both the nominal and the real exchange rate. b. the nominal exchange rate but not the real exchange rate c. the real exchange rate but not the nominal exchange rate d. neither the nominal exchange rate nor the real exchange rate