Which of the following statements regarding price elasticity of supply and the length of time for adjustment is FALSE?
A) The longer is the time period for adjustment, the greater is the price elasticity of supply.
B) The longer is the time period for adjustment, the less is the extent to which resources flow into (or out of) an industry through expansion (or contraction) of existing firms.
C) The longer is the time period for adjustment, the greater is the extent to which entry or (exit) of firms increases or (decreases) production in an industry.
D) The shorter the time period for adjustment, the greater is the price elasticity of supply.
B
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Activist policymakers, compared to nonactivists, are more likely to emphasize ________ considerations and to prefer ________
A) short-run; rule-determined B) long-run; discretionary policy C) short-run; discretionary policy D) long-run; rule determined E) business; flexible plans
Lorrie will receive a nominal wage increase of 10 percent this year. The inflation rate was 5 percent last year and is predicted to be 8 percent this year. If the economic forecast is correct, her real wage this year
a. will increase by approximately 2 percent b. will increase by approximately 8 percent c. will increase by approximately 5 percent d. will remain the same e. cannot be calculated without knowing the number of dollars by which her wage increases
Other things the same, an increase in the expected price level shifts
a. short-run aggregate supply right. b. short-run aggregate supply left. c. aggregate-demand right. d. aggregated-demand left.
Explain some of the steps that a government would wish to adopt in an inflationary environment.
What will be an ideal response?