One of the underlying assumptions made when drawing the short-run aggregate supply curve is that:
a. average wages and resource costs tend to be sticky in the short run
b. there are many buyers and sellers who are price takers.
c. sellers offer differentiated products in the short run.
d. capital is perfectly mobile between different industrial sectors in the short run.
a
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The defining feature of business cycles is that they
A) are inherently bad. B) represent the underlying trend of real GDP in the economy. C) are fluctuations about trend in real GDP. D) measure prospects for future growth in the economy.
Economic profit is equal to total revenue minus the
a. explicit cost of producing goods and services. b. opportunity cost of producing goods and services. c. accounting cost of producing goods and services. d. implicit cost of producing goods and services.
According to the AS/AD model, if the economy is in a recession and the Fed wants to increase output and employment, it should:
A. raise reserve requirements. B. act to increase the money supply. C. act to decrease the money supply. D. raise interest rates.
The largest spending category for state governments is
A. highway construction. B. education. C. border patrol. D. welfare.