What is the shape of the modern short-run aggregate supply (SRAS) curve? Why?
What will be an ideal response?
The short-run aggregate supply curve is initially horizontal, then upward sloping. If the price level increases in the short run, some costs for firms stay constant. The higher product price leads to higher profits, and the firms expand production. Hence, aggregate output can increase in the short run.
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In the permanent-income hypothesis incorporating rational expectations, the actual cyclical pattern of consumption in the United States is too ________ to justify the assumption that a current change in income ________
A) smooth, is a poor guide to future income changes B) volatile, is a poor guide to future income changes C) smooth, leads to a gradual change in permanent income D) volatile, leads to a gradual change in permanent income
As individuals hold more of their financial assets in the form of money market accounts and mutual funds, the velocity of money will decrease
a. True b. False Indicate whether the statement is true or false
What does the "double coincidence of wants" refer to?
Credit cards
a. defer payments. b. are a store of value. c. have led to wider use of currency. d. are part of the money supply.