In a perfectly competitive market, in response to a permanent decrease in demand:
a. the short run equilibrium price will be higher than the eventual long run equilibrium price
b. the short run equilibrium price will be lower than the eventual long run equilibrium price.
c. the short run equilibrium price will be the same as than the eventual long run equilibrium price.
d. we cannot know whether the short run equilibrium price will be below the eventual long run equilibrium price.
b
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For countries with high seigniorage returns, we expect
A) PPP holding better. B) a high and variable inflation rate. C) a smaller role for their currencies as an international store of value. D) All of the above.
An inflationary gap occurs when
A) aggregate demand falls, but other things remain constant. B) short-run aggregate supply falls, but other things remain constant. C) the short-run equilibrium level of real GDP is greater than long-run aggregate supply. D) the short-run equilibrium level of real GDP is less than long-run aggregate supply.
All of the following are automatic fiscal stabilizers EXCEPT
A) a congressionally mandated decrease in tax rates to stimulate the economy.
B) a decrease in unemployment compensation payments during an expansion.
C) a decrease in overall tax revenues during a recession.
D) an increase in unemployment expenditures during a recession.
Which diagram illustrates the effects on the peanut butter market, if severe flooding destroys a large portion of the peanut crop in the economy?
What will be an ideal response?