Suppose an economy is initially in long-run equilibrium and it then experiences a supply shock in the form of exceptionally high energy prices. Which of these will be true in this economy?
a. The short-run aggregate supply curve will shift leftward, and the long-run supply curve will shift rightward.
b. The short-run aggregate supply curve and the long-run supply curve will shift rightward
c. The short-run aggregate supply curve will not shift, and the long-run aggregate supply curve will shift rightward.
d. The short-run aggregate supply curve will shift rightward, but the long-run aggregate supply curve will not shift.
e. The short-run aggregate supply curve and the long-run supply curve will shift leftward.
e
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Why does gold, which is a relatively nonessential item, have a higher price than water, which is essential to life?
What will be an ideal response?
Suppose an increase in the price of golf clubs from $75 to $125 leads to an increase in quantity supplied from 200 units to 300 units. The price elasticity of supply for golf clubs at the original price of $75 is ________, so supply is ________.
A. 4/3; elastic B. 2; inelastic C. 3/4; inelastic D. 2; elastic
Which of the following generally occurs when a central bank pursues contractionary monetary policy?
A) the central bank purchases bonds and the interest rate increases. B) the central bank purchases bonds and the interest rate decreases. C) the central bank sells bonds and the interest rate increases. D) the central bank sells bonds and the interest rate decreases.
If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is
A) perfectly inelastic. B) perfectly elastic. C) unit elastic. D) relatively elastic.