If the price level is higher than expected, firms might raise their production in the short run if
a. the nominal wage they pay their employees was set based on the expected price level.
b. prices are costly to adjust and they have set their price at some time in the past but are not ready to change it.
c. they believe that the price of their product has risen relative to the price of other products, when in fact the rise in the price of their product reflects an increase in the general price level.
d. All of the above are correct.
d
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In the circular flow model, consumption goods are bought and sold in the
A) goods markets. B) financial market. C) factor markets. D) government market. E) monetary flows.
The existence of internal economies of scale
A) cannot be associated with a perfectly competitive industry. B) may be associated with a perfectly competitive industry. C) is associated only with sophisticated products such as aircraft. D) cannot form the basis for international trade. E) focuses more on the industry than individual firms.
A reduction in aggregate demand will normally reduce
a. prices. b. real GDP. c. employment. d. All of the above are correct.
Firms that do not reach their minimum long run average cost must, to avoid continued losses, either adjust their scale or leave the industry
Indicate whether the statement is true or false