Which of the following is most likely to throw an economy into a recession?
a. a reduction in the real interest rate
b. an unanticipated increase in short-run aggregate supply
c. an unanticipated increase in aggregate demand
d. an unanticipated reduction in aggregate demand
D
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Suppose the MRP of the 49th worker at a firm is $25 and that the market wage rate is $15. We know that if this firm operates in perfectly competitive product and labor markets
A) the firm is paying wages above the minimum wages. B) the firm's profits would increase if it fired some workers. C) the firm would be more profitable if it hired more workers. D) the firm should use more capital.
A decrease in the price level
A) shifts the SRAS curve to the right. B) shifts the SRAS curve to the left. C) causes an upward movement along the existing SRAS curve. D) causes a downward movement along the existing SRAS curve. E) none of the above
According to the interest rate effect, an increase in the price level causes people to:
a) increase their money holdings, which increases interest rates and decreases investment spending. b) decrease their money holdings, which increases interest rates and decreases investment spending. c) to increases their money holdings, which decreases interest rates and decreases investment spending. d) to decrease their money holdings, which decreases interest rates and increases investment spending.
Use the following graph showing the long-run supply and demand curves in a perfectly competitive industry to answer the next question.
The curves suggest that this is
A. a decreasing-cost industry. B. an increasing-cost industry. C. a constant-cost industry. D. not possible, because the supply curve is always upward sloping.