Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting downward
C. Aggregate demand shifting rightward
D. Aggregate demand shifting leftward
Answer: B
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When the economy is producing its potential output, an increase in government spending must necessarily reduce some component of private spending. This phenomenon is called
A) the multiplier effect. B) entitlement spending. C) fiscal policy. D) crowding out.
The South's post-Civil War backwardness was due to all of the following except
(a) extensive wartime destruction of life and property. (b) the fiscal disaster of the Confederacy, whereby nine tenths of the state banks in the South vanished. (c) the price of cotton was increasing, as it had prior to the Civil War, thus keeping cotton profitable and discouraging investors in the South from developing a modern manufacturing system. (d) the failure of the sharecropping system to provide incentives for innovation and progress in agriculture.
If the MRP of the 13th worker hired is $40 and the MLC of that worker is $34, the firm
a. lost money by hiring that worker b. cannot hire that worker unless more capital is added to production, in which case the firm will profit if the cost of the worker and capital is less than the revenue theworker generates c. profited only if price of the good increased d. must have lost money on the 12 workers it hired prior to hiring this 13th worker e. profited by hiring that worker
In Okunland, a country whose economy operates according to Okun's law, real GDP equals $7,520 billion, potential GDP equals $8,000 billion, and the actual unemployment rate is 8 percent. What is the natural rate of unemployment in Okunland?
A. 2 percent B. 11 percent C. 6 percent D. 5 percent