Aggregate demand decreases and real output falls but the price level remains the same. Which factor would most likely contribute to downward price inflexibility?
A. Menu costs.
B. Lower interest rates.
C. An increase in aggregate supply.
D. The real-balances effect.
Answer: A
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Which of the following is (are) a guideline(s) to be used in the estimation of cash flows?
a. cash flows should be measured on an incremental basis b. cash flows should be measured on an after-tax basis c. all the indirect effects of the project should be included d. all of the above e. none of the above
For any given tax, imposing a tax in a market with a highly inelastic demand will:
A. cause more deadweight loss than a market with an elastic demand. B. generate higher revenues than a market with an elastic demand. C. Both of these statements are true. D. Neither of these statements is true.
Prices below the free market equilibrium price are inefficient because:
A. they prevent mutually beneficial transactions. B. no one can be made better off without hurting someone by participating in another transaction. C. all mutually beneficial transactions happen. D. more goods could be produced using society's resources.
Which types of firms have limited liability?
A) corporations B) corporations and partnerships C) partnerships D) proprietorships