In the long run, changes in the money supply affect only the price level because
a. the aggregate demand curve is vertical.
b. the aggregate demand curve is downward sloping.
c. the long-run aggregate supply curve is vertical.
d. the long-run aggregate supply curve is upward sloping.
e. current real GDP is less than the economy's potential GDP.
C
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Sam's income elasticity of demand for Product A is 1.15, while his income elasticity of demand for Product B is –1.15 . Given these values, what will happen to Sam's consumption of Products A and B if his income increases by 12 percent? a. Sam's consumption of Product A will fall, while his consumption of Product B will rise
b. Sam's consumption of Product A will rise, while his consumption of Product B will fall. c. Sam's consumption of Product A will fall, while his consumption of Product B will remain the same. d. Sam's consumption of Product A will remain the same, while his consumption of Product B will fall.
Which of the following is an example of menu costs?
a. deciding on new prices b. printing new price lists c. advertising new prices d. All of the above are examples of menu costs.
Sunk costs are those costs that:
A. do not vary without output. B. can be collected even after they have been paid. C. do vary with output. D. are forever lost after they have been paid.
Answer the following questions true (T) or false (F)
1. The market demand for The Federalist Papers is likely to be more elastic than the market demand for a best-selling mystery novel. 2. The demand for heating oil in the short run is more elastic than the long run demand for heating oil. 3. The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity of demand for all breakfast cereals.