A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only.
B. aggregate demand curve only.
C. aggregate demand curve, and the short-run aggregate supply curve would shift in response.
D. short-run aggregate supply curve and the long-run aggregate supply curve.
Answer: A
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Suppose research indicates that the effects of a one degree increase in Earth's average temperature would be much more devastating than previously believed. Therefore, the greater the marginal benefit of reducing greenhouse gases, other things constant,
a. the lower the optimal level of emissions b. the higher the optimal level of emissions c. the likelier that the level of emissions would have no effect d. the lower the optimal level of cleaner air e. None of the answers is correct
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Inflation accompanied by falling real output and employment is known as:
A. Laffer's law. B. Okun's law. C. stagflation. D. the Phillips Curve.
If investors expect interest rates to fall significantly in the future, the yield curve will be inverted. This means that the yield curve has a ________ slope
A) steep upward B) slight upward C) flat D) downward