In the short run, if prices are fixed, the aggregate supply curve is
A. vertical
B. upward sloping.
C. horizontal.
D. downward sloping.
Ans: C. horizontal.
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One reason supply curves have an upward slope is because
A) increased supply will require increased technology. B) to have more of the good supplied requires more firms to open. C) people will pay a higher price when less is supplied. D) a higher price brings a greater profit, so firms want to sell more of that good. E) None of the above answers is correct because supply curves have a downward slope.
When a certain competitive firm produces and sells 40 units of output, its total revenue is $740 . If there is no change in price, then what is the amount of the firm's total revenue if it produces and sells 45 units of output?
If there is a shortage
A. consumers will drive down the price further. B. firms will drive up the price to enhance profits. C. the price will decline to the equilibrium level. D. fewer producers want to sell the product because it is too scarce.
If a point lies on the monetary policy reaction curve, and at this point the inflation rate equals the target rate of inflation, we know that:
A. the real interest rate corresponding to this point is below the long-run real interest rate. B. current output is above potential output. C. the real interest rate corresponding to this point is equal to the long-run real interest rate. D. the real interest rate corresponding to this point is above the long-run real interest rate.