Why is P3 below P2 instead of above it?
a. New producers enter the industry and supply expands, driving down price.
b. Increased demand for inputs causes input prices to rise and output prices to fall.
c. Quantity decreases overall but demand drops, driving down price.
d. Demand shifted too far right and could not be sustained, so it shifted left again.
a. New producers enter the industry and supply expands, driving down price.
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The M2 aggregate
A) includes M1 plus short-term investment accounts. B) includes M1 plus large-denomination time deposits. C) equals currency plus checking account deposits at commercial banks. D) is the best definition of money purely as a medium of exchange.
In the monetary intertemporal model, the long-run effects of an increase in the level of money include
A) an increase in employment. B) lower output. C) higher real wages. D) higher nominal wages.
In the markets for goods and services in the circular flow diagram, households act as
What does a production possibilities frontier show?
a) scarce and less scarce resources b) global trade-offs and costs of doing business c) an economy that is producing but not at the maximum d) the maximum amount that an economy can produce