Which of the following is an accurate statement about the aggregate supply curve?
a. It is flat when prices are inflexible.
b. It is flat when unemployment is low.
c. It is steep when the economy is at excess capacity.
d. It is steep when the marginal cost rises little as output increases.
a. It is flat when prices are inflexible.
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Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals
A) $7,400. B) $6,400. C) $5,800. D) 2,440 units.
An income tax will have zero welfare cost when an individuals labor supply curve is perfectly inelastic _____
a. always b. never c. only if the income effect is zero d. only if the substitution effect is zero
Refer to the above diagram. A shortage of 160 units would be encountered if price was:
A. $1.10, that is, $1.60 minus $.50. B. $.50. C. $1.00. D. $1.60.
A profit-maximizing perfectly competitive firm will
A. produce an output at which marginal cost equals marginal revenue. B. produce an output at which marginal cost equals price. C. have a marginal cost curve that intersects the minimum point of its average total cost curve. D. A perfectly competitive firm will do all of these things.