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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A commercial bakery makes white bread and wheat bread. Therefore, a decrease in the market price of white bread tends to
A) increase the demand for wheat bread. B) increase the demand for white bread. C) increase the baker's cost of making wheat bread. D) decrease the baker's cost of making wheat bread.
An increase in aggregate demand causes an increase in ________ only in the short run, but causes an increase in ________ in both the short run and the long run
A) real GDP; real GDP B) real GDP; the price level C) the price level; real GDP D) the price level; the price level
The concepts of comparative advantage, specialization, and trade form a compelling argument in favor of:
A. self-sufficiency. B. protectionism. C. only exporting goods and not importing goods. D. free trade.
Joe prefers a three-pack of soda to a six-pack. What properties does this preference violate?
A. Diminishing MRS B. Transitivity C. More is better D. Completeness