Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Unemployment will rise.
B) Prices will increase.
C) Output will decrease.
D) Short-run aggregate supply will shift to the right.
D
You might also like to view...
If the demand curve for a good is a downward sloping straight line, the demand for the good will be more price elastic the higher is the
A) price of the good. B) price of complements. C) income of consumers. D) income elasticity of demand for that good.
Which of the following is true of perfectly competitive firms? a. It is difficult for entrepreneurs to become suppliers of a product in a perfectly competitive market structure. b. A perfectly competitive firm has a perfectly elastic supply curve
c. In a perfectly competitive market, an individual seller can change his price and it will not alter the output he sells. d. None of the above are true.
Which of the following functions is not performed by financial markets?
a. facilitating large-scale production b. reallocating spending across time c. reducing risk through diversification d. discovering new production techniques e. disciplining management of corporations
Which of the following statements or questions exemplify normative economics? (check all that apply)
a. The government ought to bail out distressed banks. b. What will be the result of a Continental Airlines and United Airlines merger? c. The government should increase the minimum wage. d. What should the Federal minimum wage be? e. When the price of gas rises, the quantity consumed falls.