A rightward shift in the aggregate supply curve is generally associated with a reduction in resource prices
a. True
b. False
Indicate whether the statement is true or false
True
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Refer to the above figure. Suppose the current aggregate demand is represented by AD2. If aggregate demand falls to line AD3, then
A) the new equilibrium will be at j. B) the new equilibrium will be at k. C) the new equilibrium real Gross Domestic Product (GDP) will be x. D) a new price level will be established at a.
One risk of targeting inflation at zero is that ______.
a. it may damage the credibility of the central bank b. deflation may be prevented c. investment spending may reach unsustainable levels d. interest rates may fall too low
You are given the following short-run information for an individual firm. Labor (L) is the only variable input. The price of labor is $200/week. Fixed costs are $100/week. Complete the rest of the table. Describe the relationship between the MP and
MC. At which output level does the law of diminishing returns set in?
If resources are misallocated in a perfectly competitive market, then, in the long run, profit opportunities will:
A. bring about a less efficient allocation of resources. B. bring about a more efficient allocation of resources. C. not bring about a reallocation of resources unless firms are subsidized. D. not bring about a reallocation of resources unless there is government regulation.