Refer to the diagram. Assume that nominal wages initially are set on the basis of the price level P 2 and that the economy initially is operating at its full-employment level of output Q f . In the short run, cost-push inflation could best be shown as:
A. a leftward shift of aggregate supply from AS 2 to AS 3 .
B. a move from b to c on AS 2 .
C. a move from b to c to d.
D. a move from b to f to d.
A. a leftward shift of aggregate supply from AS 2 to AS 3 .
You might also like to view...
Invention cannot be successful financially if price is
a. greater than marginal cost because invention is based largely on social costs. b. greater than marginal cost because invention is based solely on external costs. c. equal to marginal cost because invention is based largely on variable costs. d. equal to marginal cost because invention is based largely on fixed costs.
When the social cost curve is above a product's supply curve,
a. the government has intervened in the market. b. a negative externality exists in the market. c. a positive externality exists in the market. d. the distribution of resources is unfair.
What would be shown through a sustained increase in real output per capita?
a. the size of budget surpluses b. efficient use of scarce resources c. the value of human capital d. long-term economic growth
Regarding the purchasing of INSURANCE in particular, the most important difference(s) between "adverse selection" and "moral hazard" in general is/are that
A. adverse selection deals with "hidden information," whereas moral hazard deals with "hidden actions." B. usually the insurer worries more about adverse selection BEFORE the insurance is purchased, whereas it worries more about moral hazard AFTER the insurance is purchased. C. Both of the above statements are true. D. None of the above statements are true.