The long-run aggregate supply curve is vertical if
A. the Fed follows optimal monetary policy.
B. the government follows optimal fiscal policy.
C. technology is fixed.
D. wages and other costs fully adjust to changes in prices in the long-run.
Answer: D
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The principle that "as one input increases while the other inputs are held fixed, output increases at a decreasing rate" is known as the
A) marginal principle. B) principle of diminishing returns. C) principle of opportunity cost. D) spillover principle.
Using a graph of the classical labor market, illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage. What will eventually happen in this labor market if it is perfectly competitive?
What will be an ideal response?
Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign currency exchange?
a. the exchange rate falls causing U.S. residents to import more b. the exchange rate falls causing U.S. residents to import less c. the exchange rate rises causing U.S. residents to import more d. the exchange rate rises causing U.S. residents to import less
When contractionary monetary policy increases the interest rate, it causes the price level to:
A. decrease, and output to increase. B. rise, and output to decrease. C. rise, and output to increase. D. decrease, and output to decrease.