Refer to the graph below. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. Demand-pull inflation in the long run can best be illustrated as a shift of:
A. AS1 to AS2, and back again to AS1
B. AD1 to AD2, and back again to AD1
C. AS1 to AS2, consequently making AD1 shift to AD2
D. AD1 to AD2, consequently making AS1 shift to AS2
D. AD1 to AD2, consequently making AS1 shift to AS2
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Transactions costs are the
A) costs of using the Coase theorem. B) opportunity costs of conducting a transaction. C) external marginal costs of the externality. D) reason why taxes cannot affect the inefficiency resulting from an external cost. E) external costs when a firm pollutes.
If a nation's central bank increased domestic interest rates, the nation's exchange rate would change if the country's exchange rate was a
A) a flexible exchange rate. B) a fixed exchange rate. C) a crawling peg. D) a nominally fixed exchange rate.
Poverty and illness interact in a reciprocal relationship that is not equally strong in both directions
Indicate whether the statement is true or false
In an effort to lose weight, Sam posts flyers all over town that offer a reward of $50 to anyone who catches him eating unhealthy food. Sam's flyers are an example of:
A. price-optimization theory. B. a way to deal with inconsistent costs. C. the law of supply. D. a commitment device.