The short-run aggregate supply curve will shift to the right when:
A. Energy prices increase.
B. Government regulation increases.
C. Prices of inputs decrease.
D. Investment spending decreases.
E. Productivity rates decrease.
Answer: C. Prices of inputs decrease.
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When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called
A) the income effect. B) the deadweight loss effect. C) the elasticity effect. D) the substitution effect.
Friedman and Phelps suggested that there should not be a stable relationship between inflation and unemployment, but there should be a stable relationship between
A) anticipated inflation and frictional unemployment. B) anticipated inflation and cyclical unemployment. C) unanticipated inflation and frictional unemployment. D) unanticipated inflation and cyclical unemployment.
A decrease in the real interest rate in the United States will cause the dollar to ________ relative to other currencies and ________ net exports and real GDP
A) appreciate; increase B) appreciate; reduce C) depreciate; increase D) depreciate; reduce
The substitution effect of a wage increase
a. probably leads most workers to want to work more. b. certainly leads all workers to want to work more. c. probably leads most workers to want to work less. d. certainly leads most firms to want to employ more workers.