Refer to the given figure.
In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as:
A. short-run aggregate supply shifting downward.
B. short-run aggregate supply shifting upward.
C. aggregate demand shifting leftward.
D. long-run aggregate supply shifting leftward.
Answer: B
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Use the economic way of thinking to complete the following statement: An entrepreneur who owns his own building
A) enjoys the building as a free good. B) sacrifices rental income he could have been earned on the building. C) enjoys lower costs than other entrepreneurs who choose to rent buildings from others. D) enjoys larger economic profits compared to other entrepreneurs who choose to rent buildings from others.
Which statement is true?
A. The entire expansion from the trough to the peak is the recovery phase. B. The entire contraction from the peak to the trough is the recession phase. C. Recessions never last more than one year. D. Prosperity is the first phase of expansion.
A government wishing to maximize its tax revenues should
A) always assess the highest possible tax rate. B) always assess the lowest possible tax rate. C) determine the highest possible tax rate and then back it down by exactly 4 percentage points. D) push tax rates up to the point where revenues peak, but raise the tax rate no farther.
A tax elasticity of supply equal to 0.21 indicates that
A. Workers will cut back on the number of hours worked if tax rates increase. B. Employers will hire more workers if tax rates increase. C. Employers will not hire any workers if tax rates increase. D. Workers will not cut back on the number of hours worked if tax rates increase.