A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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The ERT Company sells lead pencils in a perfectly competitive market for $5 per box of a dozen pencils. The firm currently produces 2,500 boxes of lead pencils each week and average total cost at this level of production is $5.15
What level of profit is this firm earning? Explain.
The opportunity cost of hold real money balances is the:
A) interest rate. B) price level. C) all of the above. D) none of the above.
The flatter is the LM curve
A) the more effective is fiscal policy. B) the less effective is fiscal policy. C) the less is the interest sensitivity of saving. D) the less is the interest sensitivity of the money supply.
For goods on which a relatively small portion of income is expended, _____
a. income effects will be small relative to substitution effects b. income effects will be large relative to substitution effects c. income effects will be about the same as substitution effects d. there will be no income effects.