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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Grape juice prices increased by 20 percent in 2007. Suppose in response grape growers did not increase or decrease their grape production. The elasticity of supply is best described as
A) perfectly inelastic. B) perfectly elastic. C) inelastic. D) elastic.
A marginal adjustment only refers to a minor change
a. True b. False
The net present value of $1,000 received at a time in the future would
a. decline if the $1,000 were received sooner. b. increase if the delivery date for the $1,000 were set farther into the future. c. increase if the interest rate rose. d. increase if the interest rate fell.
Which of the following contributed to the soaring housing prices during 2002-2004?
a. the Fed's high-interest rate policy b. the tightening of loan standards by commercial lenders c. the increasing popularity of fixed-rate, long-term loans to lock in low interest rates d. the Fed's low-interest rate policy