The short-run aggregate supply curve:
A. Is vertical and the long-run aggregate supply curve is vertical
B. Slopes upward and the long-run aggregate supply curve also slopes upward
C. Slopes upward, but the long-run aggregate supply curve is horizontal
D. Slopes upward, but the long-run aggregate supply curve is vertical
D. Slopes upward, but the long-run aggregate supply curve is vertical
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All industrialized countries have become “service economies” in recent decades. Explain the reasons behind this shift.
What will be an ideal response?
Refer to the above figure. Suppose the U.S. economy is currently operating at point C. Which of the following actions would you recommend to the president of the United States?
A) Engage in contractionary fiscal policy by reducing government spending. B) Reduce taxes to stimulate investment, consumption and net exports. C) Increase government spending while holding taxes constant. D) Reduce the interest rate to stimulate investment minimizing the crowding out effect.
Why are firms in monopolistic competition unable to earn an economic profit in the long run?
What will be an ideal response?
Assume that you borrow $2000 at 10% annual interest to finance a new business project. For this loan to be profitable, the minimum amount this project must generate in annual earnings is
A) $400. B) $201. C) $200. D) $199.