Which of the following would qualify as an aggregate demand shock?
A. A seasonally expected increase in oil prices
B. An anticipated tax cut
C. An unexpected reduction in consumer confidence
D. An unexpected increase in oil prices
Answer: C
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Efficiency wages are:
A. wages deliberately set above the market rate in order to increase productivity. B. not a cause of unemployment. C. generally a disincentive for an employee to work hard to try to keep their job. D. All of these are true.
With flexible exchange rates, the imbalance between debits and credits arising from shifts in currency demand and/or supply is accommodated through special financial borrowings or reserve movements
a. True b. False Indicate whether the statement is true or false
Assume that two firms in an oligopoly market are unable to collude. Once the Nash Equilibrium is reached a. it is always possible for one firm to increase its profits by producing more output. b. the two firms are jointly earning monopoly profit
c. neither firm is able to improve its outcome on its own. d. the outcome is equivalent to a competitive equilibrium.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.