Which of the following explains why higher prices in the goods and services market measured by the CPI leads to an upward-sloping aggregate supply curve?
a. The higher prices will temporarily improve profit margins because the cost of wages and salaries are fixed in the short run.
b. The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate
additional output.
c. The higher prices will expand the economy's resource base and, thereby, stimulate additional output.
d. The higher prices will improve technology and, thereby, stimulate additional output.
a
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The government makes all economic decisions in a market economy
Indicate whether the statement is true or false
A key idea of the new growth theory is that
A) technology is not an important determinant of economic growth. B) economic growth is not as important as leisure time growth. C) the greater the rewards for technological advances, the greater the number of technological advances. D) the rewards associated with technological advances have little to do with the actual rate of invention or innovation.
If government spending increased by $50 billion and the MPC within the economy was 0.8, what would be the total impact on real GDP?
a. $62.5 billion decrease b. $62.5 billion increase c. $250 billion decrease d. $250 billion increase
Investment is the least volatile component of aggregate spending in the economy
Indicate whether the statement is true or false