When there is a recession (a fall in output) and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is
A) stagflation. B) inflation. C) aggregate shifts. D) stagnation.
A
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Which of the following is a role played by the Fed in the U.S. economy?
A) It acts as a lender of the last resort in case of bank runs. B) It determines the import duty on raw materials being imported into the country. C) It acts as a direct source of funds for new businesses and startups. D) It takes political decisions during periods of recessions.
A reason why a firm's demand for labor curve slopes downward is that, holding everything else constant,
A) the extra cost of hiring additional units of labor increases as a firm hires more units of labor. B) as more labor is hired, labor's marginal product falls due to diminishing marginal returns. C) the firm's demand curve for the product produced by the labor is downward sloping. D) each additional unit of labor hired is less efficient than previously hired units.
Suppose a perfectly competitive industry is in long-run equilibrium. If a decrease in demand leads to a lower long-run price, we know that
A) this is a decreasing-cost industry. B) this is an increasing-cost industry. C) some firms will be losing money in the long run. D) after further adjustments, price will rise to its original level.
Suppose a company that produces mouthwash branches out into producing toothpaste. If this expansion reduces the average cost per unit, the company must
a. benefit from vertical integration b. benefit from horizontal integration c. experience economies of scale d. experience economies of scope e. have no transaction costs