Which of the following statements is TRUE about the long-run and short-run aggregate supply curve in the classical model?
A. The long-run aggregate supply curve is vertical, and the short-run curve is horizontal.
B. The long-run and short-run curves start out horizontal and eventually become vertical.
C. The long-run curve is vertical, and there is no short-run curve since all adjustments occur quickly.
D. The long-run aggregate supply curve is not defined, and the short run curve is vertical.
Answer: C
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If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?
a. Take wheat from government storage and sell it. b. Encourage farmers to use more fertilizer. c. Lower the price of rye. d. Subsidize purchases of farm equipment. e. Encourage farmers to grow less wheat.
As existing firms exit an increasing-cost industry
A. the position of the LRAC curve doesn't change, but firms move up their LRAC curve. B. the LRAC curve shifts down. C. the position of the LRAC curve doesn't change, but firms move down their LRAC curve. D. the LRAC curve shifts up.
Refer to the information provided in Figure 27.1 below to answer the question(s) that follow.
Figure 27.1Refer to Figure 27.1. Suppose the economy is at Point A. A(n) ________ can cause a movement to Point E.
A. increase in aggregate demand B. decrease in aggregate demand C. decrease in the price level D. increase in the price level
Italy should specialize in the production of
A. neither good and import both goods. B. cars and import boats. C. both goods and import neither good. D. boats and import cars.