A positive temporary supply side shock will:
A. increase the level of potential output in the long run.
B. decrease the price level in the long run.
C. increase the price level in the long run.
D. have no effect in the long run.
Answer: D
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Average product of labor is equal to ________
A) total product multiplied by the quantity of labor employed. B) the total product produced C) the quantity of labor employed divided by total product D) total product divided by the quantity of labor employed
More borrowing by firms in the domestic currency is one way to reduce currency mismatch. What would be the major issue if government insured repayment of the loans at a low cost?
A) There would be lots of new borrowing, and the production sector might not be able to keep pace. B) It would be too expensive. C) There could be a moral hazard problem with excessive risk taking. D) It is likely that no new borrowing would take place—firms need the incentive of tax breaks.
Refer to the above diagram. A contractionary fiscal policy can best be represented by a:
A. shift in the aggregate demand curve from AD1 to AD2. B. movement along the aggregate demand curve. C. shift in the aggregate demand curve from AD1 to AD3. D. shift in the aggregate demand curve from AD3 to AD2.
What is economic growth?
What will be an ideal response?