Graphically long-run equilibrium occurs at the intersection of the aggregate demand curve and the:
A. expenditure line.
B. long-run aggregate supply line.
C. short-run aggregate supply line and the long-run aggregate supply line.
D. short-run aggregate supply line.
Answer: C
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The total of all economic transactions between a nation and the rest of the world is referred to as the
A) balance of payments. B) balance of trade. C) balance of power. D) exchange rate.
Suppose a cost function is TC = Aq3 + bq2 + cq + d. Then the average variable cost is
a. Aq2 + bq + cq +d/q b. Aq2 + bq + c c. Aq3 + bq2 + cq d. d
Under a perfectly competitive price system
a. an equitable allocation of the available resources will always result. b. there is no opportunity for individuals to trade amongst themselves. c. there is no reason to expect that voluntary trading will result in an equitable allocation of the available resources. d. None of the above will result.
When expenditures change due to changes in the real value of money caused by variations in the price level, this is known as the
A. interest rate effect. B. real-balance effect. C. open economy effect. D. aggregate balances effect.