Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2.
B. P3 and Y1.
C. P2 and Y2.
D. P2 and Y3.
Answer: D
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Output in the long run is determined by which of the two following factors when an economy operates at full employment?
A) capital and supply B) capital and labor C) the "real" GDP and purchases D) imports and exports
The quantity that a firm will supply in the short run
A. can be read from its average cost curve. B. can be read from its average variable cost curve. C. can be read from the firm’s marginal cost curve above average variable cost. D. is always zero above minimum average variable cost.
The subgame-perfect equilibrium of a two-stage game in which firms first choose capacities and then engage in a Bertrand price setting game resembles the equilibrium in:
a. the competitive model. b. the Cournot model. c. the cartel model. d. the price leadership model.
France has a higher natural rate of unemployment than the United States. This suggests that
a. France is at a higher point on its long-run Phillips curve and so has higher inflation than the United States. b. France is at a lower point on its long-run Phillips curve and so has lower inflation than the United States. c. France's Phillips curve is to the left of that of the United States, possibly because they have higher inflation. d. France's Phillips curve is to the right of that of the United States, possibly because they have more generous unemployment compensation.