The reason why the price level does not change along the horizontal segment of the aggregate supply curve is because
a. the price increases for some goods are offset by the price decreases for other goods
b. unused resources can be put to work without creating any upward pressure on prices
c. the government fixed the price of resources so that they cannot increase in price when employment levels rise
d. GDP rises rapidly so that the price level does not rise
e. GDP rises slowly so that the price level does not rise
B
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Bonds with no default risk are called
A) flower bonds. B) no-risk bonds. C) default-free bonds. D) zero-risk bonds.
The Federal Reserve's ability to control the amount of demand deposits in the system depends on its ability to
A) clear checks. B) charter national banks. C) print currency. D) regulate bank reserves.
If the firm in Figure 17-4 above maintains its set price of P0, rather than dropping price to P1, the welfare loss to society due to this decision is
A) J + K. B) K - G. C) G + H. D) H + K. E) F + G + H.
If the firm has no fixed costs and variable costs of $2 per unit, what is the value of the firm's monopoly profits when it sets a price that maximizes its monopoly profits?
a. $7 b. $12 c. $15 d. $16