Refer to the above figure. Assume that B is the current long-run aggregate supply (LRAS) curve and E is the current short-run aggregate supply (SRAS) curve. If a 90-day embargo of oil from the Middle East to the United States were announced, and if after that 90-day period oil prices were expected to return to normal pre-embargo prices, then you would expect
A. the LRAS and the SRAS to remain at B and E, respectively.
B. the LRAS to shift to C, and the SRAS to shift to F.
C. the LRAS to remain at B, but the SRAS to shift to F.
D. the LRAS to remain at B, but the SRAS to shift to D.
Answer: D
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A. higher government subsidies to new homebuyers in that city. B. a rising population in that city. C. decreasing incomes of people in that city. D. decreasing costs of construction materials and services in that city.
Discuss why a budget deficit results in a different real interest rate under the Ricardo-Barro effect than under the crowding-out effect
What will be an ideal response?
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A) lower; lower B) lower; raise C) raise; lower D) raise; raise
A monopsony is an example of:
A. a buyer holding market power. B. a seller holding market power. C. a single seller holding all market power. D. an efficient market with no market power.