A movement down and to the left along the aggregate supply curve will occur when
a. firms' average markup is stable and a decrease in real GDP causes unit costs to fall
b. world oil prices fall, thus decreasing the price level
c. a change in fiscal policy causes aggregate expenditure to increase
d. firms decide to produce less than before at each price level
e. an increase in real GDP causes the price level to fall
A
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Bank X had a reputation for asking few questions when it provided loans. Five years later, the majority of the loans were not repaid. This is because the bank had failed to address the
A) moral hazard problem. B) free-rider problem. C) contrary selection problem. D) adverse selection problem.
If a perfectly competitive firm is producing 2,500 units and, at the 2,500th unit, the difference between marginal revenue and marginal cost (MR - MC) is positive, which of the following is true?
A) The firm is maximizing profit. B) The firm should increase production to maximize profit. C) The firm should decrease production to maximize profit. D) The 2,500th unit costs more to produce than the firm earns in revenue.
Forces within the economy that naturally tend to counteract recessions and inflation are known as
a. discretionary stabilizers. b. automatic stabilizers. c. demand-management policies. d. fiscal dividends.
You put money into an account that earns a 5 percent nominal interest rate. The inflation rate is 2 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest?
a. 3.6 percent. b. 2.4 percent. c. 2.0 percent. d. 4.4 percent.