Make use of the misperceptions theory to explain why the short-run aggregate supply curve is upward sloping
What will be an ideal response?
Assume that all prices in an economy rise but relative prices do not change. If individual producers fail to recognize the situation, aggregate output increases. This change in output occurs because producers think that some of the increase in prices represents increases in their products' relative prices, and they increase the quantity of their products supplied. producers fail to recognize the situation, aggregate output increases. This change in output occurs because producers think that some of the increase in prices represents increases in their products' relative prices, and they increase the quantity of their products supplied.
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In the above figure, if we begin at S1 and the Fed sells bonds
A) the price of bonds rises, and so does the interest rate. B) the price of bonds falls, and the interest rate rises. C) the price of bonds rises, and the interest rate falls. D) the price of bonds falls, and so does the interest rate.
An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A) The price level will rise, and the level of GDP will fall. B) The price level will rise, and the level of GDP will be unaffected. C) The price level will fall, and the level of GDP will fall. D) The price level will fall, and the level of GDP will rise.
Monopolistically competitive firms engage in advertising to increase market share and make demand more inelastic
Indicate whether the statement is true or false
We have a stock selling for $90.00. There is a put option for this stock with a strike price of $85 and an option price of $1.20:
A. you cannot determine the intrinsic value or time value of the option since the strike price is less than the underlying asset price. B. the intrinsic value of this option is -$5.00 and the time value of the option is $1.20. C. the intrinsic value of this option is $0.00 and the time value of the option is $1.20. D. the intrinsic value of this option is $90.00 and the time value of the option is $1.20.