The short-run aggregate supply curve is horizontal when
A) prices are inflexible and the economy is at full employment.
B) there are unemployed resources and prices do not increase when aggregate demand increases.
C) there are unemployed resources and prices do not decrease when aggregate supply increases.
D) there are no unemployed resources and prices do not increase when aggregate demand or supply increases.
Ans: B) there are unemployed resources and prices do not increase when aggregate demand increases.
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A key element of real business cycle theory is that
a. labor supply is not responsive to changes in real wages. b. labor supply is highly elastic. c. as the wage increases, workers are richer and work less. d. none of the above.
Relative to a manager of a company owned store, a franchisee is more likely to
a. Work very hard b. Not work as hard c. Work only evenings d. Work only night shifts
If the graph shown represents Tina's budget constraint, which of the following consumption bundles can Tina not afford?
A. Three pairs of earrings and four hairbands
B. Two pairs of earrings and four hairbands
C. No earrings and six hairbands
D. Cannot answer this question without knowing Tina's income and the prices of the two goods
Suppose many new brands start selling coffee in an economy, increasing the options that consumers have for coffee. This will result in: a. a decrease in the elasticity of demand for every brand of coffee. b. an increase in the elasticity of demand for every brand of coffee. c. zero elasticity of demand for every brand of coffee
d. an infinite elasticity of demand for every brand of coffee.