Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will
What will be an ideal response?
result initially in lower employment and a higher price level.
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Suppose the nation of Arcadia produces only two goods, teapots and surfboards. If Arcadia produces only teapots, it can make 40 per day. If Arcadia produces only surfboards, it can make 60 per day
What is the opportunity cost of 1 teapot in Arcadia? A) 2/3 of a surfboard B) 1.5 surfboards C) 40 surfboards D) 60 surfboards
With perfect asset substitutability and capital mobility the domestic interest rate is equal to the foreign rate
Indicate whether the statement is true or false
A price ceiling of $8 placed on the market in the graph shown:
A. is non-binding, and does not affect the market.
B. is binding, and causes a shortage.
C. is binding, and causes a surplus.
D. is non-binding, and does not prevent the market from reaching equilibrium.
Think about cost structures associated with each of the following and decide which is most likely to be a natural monopoly
a. jewelry manufacturer b. tax-preparation firm c. movie theater d. city bus company e. dry cleaner