The SRAS would be vertical:
a. if there was no profit effect
b. if there was no misperception effect.
c. if there was no profit effect or misperception effect.
d. under no conceivable set of circumstances.
c
You might also like to view...
Adam Smith believed that the individual pursuit of self-interest:
A. should usually be discouraged. B. always leads to an efficient outcome. C. is impossible in a perfectly competitive market. D. often promotes the broader interests of society.
Assume a competitive market has firms earning large economic profits. What is expected to happen over time in this competitive market and to firm's profits?
Who gains in a voluntary trade?
What will be an ideal response?
Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the long run, this policy would most likely:
A. lower inflation to 3 percent but raise unemployment to 7.5 percent. B. lower inflation to 3 percent but leave unemployment at 5.5 percent. C. raise inflation to 9 percent but lower unemployment to 4 percent. D. raise inflation to 9 percent but leave unemployment at 5.5 percent.