A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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If the Fed decreases the money supply, gross domestic product: a. increases by the same amount as the increase in the interest rate
b. decreases by a greater amount than the increase in the interest rate because of the multiplier. c. decreases by the same amount as the decrease in investment. d. decreases by a greater amount than the decrease in investment because of the multiplier. e. decreases by a lesser amount than the decrease in investment because of the multiplier.
Which of the following is not a characteristic of a perfectly competitive market?
a. There are many buyers and sellers. b. Firms can freely enter and exit the market. c. Many firms have market power. d. Firms sell very similar products.
For a monopolistic competitor, marginal revenue at its short-run equilibrium price and quantity equals:
a. price. b. marginal cost. c. average cost. d. average revenue.
What is the likely effect in an economy when total spending is too low?
a. inflation b. tax increases c. unemployment d. efficiency