If actual output exceeds potential output for a prolonged period of time, we would eventually expect factor prices to:
A. fall, causing the LAS curve to shift in to the left.
B. fall, causing the SAS curve to shift down (to the right).
C. rise, causing the SAS curve to shift up (to the left).
D. rise, causing the LAS curve to shift out to the right.
Answer: C
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The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss
Indicate whether the statement is true or false
The multiplier is equal to
a. the reciprocal of MPC. b. the reciprocal of MPS. c. MPC + MPS. d. MPC/MPS.
Insurance companies try to mitigate the problem of adverse selection by:
A. charging a higher premium to groups with similar ages or behaviors that correlate with risky behavior. B. asking potential customers a seemingly endless list of questions to gain as much information as they can about the person's risk characteristics. C. charge a higher price to all individuals to cover the lack of information. D. All of these statements are true.
If there are powerful buyers in a labor market, the use of the supply-and-demand model to analyze labor markets
A. is inappropriate. B. will cause you to believe the wage will be lower than it is. C. is completely accurate. D. will cause you to believe that fewer people will be hired than will be.