In the long-run, the price elasticity of demand is usually
a. smaller than in the short-run.
b. bigger than in the short-run.
c. the same as in the short run.
d. equal to zero.
e. can't tell from the information given.
b. bigger than in the short-run.
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Refer to the above figure. Suppose the economy is in equilibrium at point A
If the Fed tries to stimulate the economy by undertaking an expansionary monetary policy action and this is not expected by the people in the economy, we would expect to see A) aggregate supply shifts up as people anticipate the effects of the expansionary monetary system. In the short run, real GDP falls to $13 trillion and the price level rises to 120. In the long run, real GDP returns to $14 trillion, and the price level increases further, to 150. B) aggregate demand increases but people would anticipate this, causing the short-run aggregate supply curve to shift up at the same time, with the new equilibrium of $14 trillion of real GDP and a price level of 100. C) aggregate demand increases, real GDP increases, and the price level increases in the short run. In the long run, people realize the real situation, causing the short-run aggregate supply curve to shift u
Throughout history, governments have used price controls to
A. protect buyers. B. protect sellers. C. serve the “public interest.” D. All of these responses are correct.
Figure 5-11
In Figure 5-11, a consumer is initially at point A. There is a price change and she moves to B. It follows that
A. the demand for beer follows the law of demand. B. the demand for beer does not follow the law of demand. C. wine is an inferior good. D. the consumer is confused.
Higher prices for scarcer resources can improve the efficiency of an economy.
Answer the following statement true (T) or false (F)