Under classical theory, wages and prices are assumed to be relatively flexible both upward and downward. Hence, the short-run aggregate supply curve returns relatively quickly to a position of long-run equilibrium
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is
A) zero. B) positive. C) negative. D) either positive or negative.
An economy is producing its Natural Real GDP when the unemployment rate is equal to the __________ unemployment rate
A) frictional B) structural C) sum of the frictional unemployment rate and the structural D) seasonal E) cyclical
Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?
A. Dan should specialize in sandwiches, and Tracy should specialize in smoothies. B. Dan should specialize in both sandwiches and smoothies. C. Dan should specialize in smoothies, and Tracy should specialize in sandwiches. D. Tracy should specialize in sandwiches and smoothies.
Total fixed cost is
A) the cost of buying and installing new machinery. B) the cost that does not change as output changes. C) the expenditure on imported raw materials. D) the wages paid to consultants.