Refer to the diagram. If the aggregate supply curve shifted from AS 0 to AS 1 and the aggregate demand curve remains at AD 0 , we could say that:
A. aggregate supply has increased, equilibrium output has decreased, and the price level has
increased.
B. aggregate supply has decreased, equilibrium output has decreased, and the price level has increased.
C. an increase in the amount of output supplied has occurred.
D. aggregate supply has increased and the price level has risen to G.
B. aggregate supply has decreased, equilibrium output has decreased, and the price level has increased.
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The Baumol model of money demand strengthens the possibility that the LM curve is
A) horizontal. B) upward-sloping. C) vertical. D) downward-sloping.
According to the figure, if MiiTunes charges low prices, The Rock Shop should:
This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.
A. enter the market and earn $4 million.
B. enter the market and lose $2 million.
C. not enter the market and earn $0.
D. It cannot be determined what The Rock Shop will do.
Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the government increases the federal gasoline tax?
A . Consumer expenditures on gasoline decrease over the short run and long run. B. Consumer expenditures on gasoline increase over the short run and decline over the long run. C. Consumer expenditures on gasoline decline over the short run and increase over the long run. D. Consumer expenditures on gasoline increase over the short run and long run.
Which of the following will cause a reduction in current consumption?
A) a reduction in current disposable income B) a reduction in financial wealth C) a reduction in human wealth D) all of the above E) both B and C