The so-called ratchet effect refers to the characteristic in the economy where product prices, wages, and per-unit production cost are flexible when:
A. AD decreases but not when AD increases
B. AD increases but not when AD decreases
C. AS increases but not when AS decreases
D. AD shifts but not when AS shifts
B. AD increases but not when AD decreases
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Loud music from a neighbor's party is
A) a negative externality whether or not you like it. B) a positive externality whether or not you like it. C) a positive externality if you like the music, and a negative externality if you don't. D) a negative externality if you like the music, and a positive externality if you don't. E) not an externality.
Economists develop models to
A) capture every detail of the real world. B) make their arguments more realistic. C) justify the assumptions they make about people's behavior. D) help us understand economic phenomena in the real world.
Econometrics can be defined as follows with the exception of
A) the science of testing economic theory. B) fitting mathematical economic models to real-world data. C) a set of tools used for forecasting future values of economic variables. D) measuring the height of economists.
which of the following is the incorrect statement
a. during a period of inflation, prices are always rising b. when inflation is decreasing, prices are always falling c. if the inflation is constant, prices are neither rising or falling d. a and b are incorrect e. b and c are incorrect