The short-run aggregate supply curve is upward sloping because
A) a lower price level creates a wealth effect.
B) lower taxes motivate people to work more.
C) money wage rates do not immediately change when the price level changes.
D) most business firms operate with long-term contracts for output but not labor.
C
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How do legal controls on prices lead to corruption?
A. Persons who benefit from the controls are willing to bribe officials to keep the controls in place. B. Persons who make the laws may favor certain groups at the expense of others. C. Selling in the black market is very profitable, and persons therefore willingly break the law. D. Discrimination may occur as a means to limit buying or selling select groups. E. All of these responses are correct.
Increased levels of consumption:
a) Shift aggregate supply outwards so more is supplied at each price b) Shift aggregate supply inwards so less is supplied at each price c) Shift aggregate demand outwards so more is demanded at each price d) Shift aggregate demand inwards so less is demanded at each price
Which of the following is an example of a positive statement?
A) It is too hot to go jogging. B) Ceteris paribus, a teacher should award a higher grade if you study more hours for an economics test. C) When the price of an item increases, people respond by reducing their consumption of the item. D) The government should balance the budget.
Suppose two goods are perfect substitutes. The price elasticity of demand of one of the goods is
A) 0. B) 1. C) 10. D) infinity.