Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment. Which of the following will happen in the short run?
A) Output will decline.
B) Prices will decline.
C) Unemployment will decline.
D) The aggregate demand curve will shift to the left.
Answer: C
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In a competitive labor market a firm will continue to employ workers for as long as an additional worker's marginal revenue product is below the wage rate
a. True b. False Indicate whether the statement is true or false
Which of the following is a case of asymmetric information:
A. Neither you nor the insurance company has perfect information about whether a flood will occur. B. The buyer and seller of a used car don't know how long the car will operate. C. A provider of health insurance does not know whether a specific client is a smoker or not. D. None of the above are examples of asymmetric information.
Which of the following would help eliminate the trade deficit?
A. Reduced reservation wages B. Lower tariffs C. Expansionary fiscal policy D. A rise in the exchange rate
A problem that often occurs when a public good is provided by private firms is