Along a short-run aggregate supply curve, a decrease in the price level means that
A) more output is produced as consumer demand increases.
B) less output is produced as firms decrease production.
C) more output is produced as firms increase production because wages fall more than the price level falls, making it profitable to hire more workers.
D) output does not change because firms do not change the quantity they produce.
B
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In the following table, Ireland's opportunity cost of producing one unit of wheat is
Potatoes and Wheat Output (tons per hour)
| COUNTRY | POTATOES | WHEAT |
| United States | 4 | 2 |
| Ireland | 3 | 1 |
At any point on the LM curve
a. there is labor market equilibrium. b. money supply equals money demand. c. equilibrium output equals potential output. d. both commodity and money market are necessary for equilibrium. e. both b and c.
Which of the following is not an example of a flow variable?
a. The amount of income that a person earns each month b. The amount of interest that a savings account earns each week c. The amount of money in a savings account d. The amount of taxes that a person pays each year e. All of these are flow variables
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.