Real business cycle theory emphasizes that an adverse supply shock will shift the LRAS curve leftward and cause a decline in Real GDP
Indicate whether the statement is true or false
True
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Economic decision making recognizes that
A) all choices have benefits and costs. B) benefits are largely free while costs are not. C) costs are controllable but benefits are not measurable. D) prices do not reflect all information known to managers. E) resources and wants are limited.
The costs of changing price tags and price listing are known as
a) inflation-induced tax distortions. b) relative-price variability costs. c) shoeleather costs. d) menu costs.
Which of the following best explains why airlines often cut their ticket prices at the last-minute in order to fill the remaining empty seats on their flights?
A) Fixed costs in the airline industry are very large, but the marginal cost of flying one more passenger is very low. B) Airlines receive a subsidy from the government for each flight that is fully booked and departs on time. C) The Federal Aviation Administration ranks each airline based on the percentage of flights that are fully booked. These rankings affect the decisions of firms to use a particular airline to fly their employees to business meetings. D) Cutting prices makes the airlines more popular with their customers, who may fly with the same airline in the future as the result of buying low-price tickets.
The so-called "negative taxes" are better known as:
A. Government spending B. Transfer payments C. Built-in stabilizers D. Fiscal multipliers