If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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Slowdonia's current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person?
A) 10 years B) 35 years C) 70 years D) 100 years
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Suppose 1 U.S. dollar exchanges for 1 euro, and the price of a car imported from Germany is 50,000 euros. If next week the euro depreciates to 0.90 U.S. dollars to 1 euro, what will happen to the dollar price of the car for American consumers?
A. It will fall from $50,000 to $45,000. B. It will fall from $55,556 to $50,000. C. It will rise from $50,000 to $55,556. D. It will rise from $45,000 to $50,000.
On the Fed's balance sheet, assets include
A) reserves of depository institutions and mortgage-backed securities. B) U.S. government securities and mortgage-backed securities. C) currency and reserves of depository institutions. D) currency and mortgage-backed securities.