For the aggregate supply curve, the profit effect
A. Provides an incentive for producers to decrease output when prices rise.
B. Is temporary in the short run, while in the long run it is canceled out because the cost effect dominates.
C. Dominates in the long run and causes the curve to be upward-sloping.
D. Along with the cost effect causes the curve to be downward-sloping in the long run.
Answer: B
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Unit elastic demand occurs when
a. a one-unit increase in price leads to a one-unit decrease in quantity demanded b. a 1% increase in price leads to a one-unit decrease in quantity demanded c. price elasticity of demand is positive d. price elasticity of demand is exactly zero e. price elasticity of demand is exactly -1
Bad risks may be the most willing to pay high interest rates and thus get loans. This describes an example of
a. symmetrical information b. adverse selection c. natural selection d. moral hazard e. the winner's curse
Demand elasticity equals quantity times price
a. True b. False Indicate whether the statement is true or false
Central banks can use monetary policy to
What will be an ideal response?