If the economy is on the aggregate supply curve but to the right of the aggregate demand curve, which of the following will be the first market force to lead the economy toward an equilibrium?
a. At the current output level, prices will be too low and firms will increase their prices.
b. At the current price level, output will be too low, inventories will diminish, and firms will increase their production.
c. At the current output level, prices will be too low and firms will lower their prices.
d. At the current price level, output will be too high and so prices will drop so that output will drop.
e. At the current price level, output will be too high, inventories will pile up and firms will cut back on their production.
E
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In the long run,
a. all the firm’s resources are variable. b. some of the firm’s resources are variable. c. none of the firm’s resources are variable. d. the time period exceeds one year.
If Japan experiences a period of deflation and the United States does not, what will happen in the United States?
a. an increase in aggregate supply b. a decrease in aggregate supply c. a decrease in aggregate demand d. an increase in aggregate demand
In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies?
A. Pure monopoly. B. Oligopoly. C. Monopolistic competition. D. Pure competition.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A. B. A to C. C. C to D. D. B to D.