An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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The defining feature of business cycles is that they
A) are inherently bad. B) represent the underlying trend of real GDP in the economy. C) are fluctuations about trend in real GDP. D) measure prospects for future growth in the economy.
For an economy starting at potential output, a decrease in investment in the short run results in a(n):
A. increase in potential output. B. recessionary output gap. C. expansionary output gap. D. decrease in potential output.
A perfectly elastic demand curve
A) shows that a slight change in income will lead to a large reduction in price. B) is a vertical line drawn across from the quantity axis. C) shows that a slight increase in price will reduce quantity demanded to zero. D) has a slope of -1.
Table 19-1 ? American Coal British Coal Cost per Ton Cost per Ton $150 £75 From Table 19-1, what is the exchange rate between the dollar and the pound?
A. 1 dollar is worth 2 pounds. B. 1 pound is worth 2 dollars. C. 1 pound is worth 1 dollar. D. 1 pound is worth 50 cents.