Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a positive demand shock?
A.
Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will increase.
B.
Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease.
C.
Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will increase and unemployment will increase.
D.
Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will decrease.
B.
Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease.
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John decides to leave college early and play professional sports. Which of the following economic principles does John use?
i. personal economic policies ii. marginal cost versus marginal benefit analysis iii. normative versus positive economics A) i and ii B) i, ii and iii C) ii only D) i and iii E) ii and iii
For macroeconomics, banks
A) are similar to other firms. B) can be abstracted away. C) play a key role. D) are similar to households.
If the data show that periods of high economic growth rate accompanied by high inflation rates, then changes in aggregate demand are the primary source of economic fluctuations
a. True b. False Indicate whether the statement is true or false
When demand is inelastic
A. The percentage change in price is greater than the percentage change in quantity demanded. B. The product in demand has many substitute goods. C. Buyers are very sensitive to changes in price. D. The percentage change in quantity demanded is greater than the percentage change in price.