The two Keynesian assumptions in the aggregate supply and aggregate demand model are the importance of:
a. aggregate demand and the stickiness of wages and prices.
b. aggregate supply and the stickiness of wages and prices.
c. aggregate demand and the flexibility of wages and prices.
d. aggregate supply and the flexibility of wages and prices.
a. aggregate demand and the stickiness of wages and prices.
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Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price, a
A) shortage exists and the price falls to restore equilibrium. B) shortage exists and the price rises to restore equilibrium. C) surplus exists and the price falls to restore equilibrium. D) surplus exists and the price rises to restore equilibrium. E) surplus exists but nothing happens until either the demand or the supply changes.
A . Imagine that the state of Georgia decides to reduce emissions from chemical plants by taxing the production of chemicals. Will this reduce chemical plant emissions in the state? Will your answer to this question depend on whether or not Alabama has
a similar tax? b. Will this tax protect Georgians from the negative externalities associated with these emissions? Will your answer to this question depend on whether or not Alabama has a similar tax?
In the short run, an unanticipated increase in the money supply will exert its primary impact on
a. output and employment rather than on prices. b. prices; output and employment will be largely unaffected. c. interest rates; rising interest rates will stimulate additional saving. d. prices, if the economy operates at an output level below its long-run supply constraint.
Suppose losses cause industry X to contract and, as a result, the prices of relevant inputs decline. Industry X is:
A. a constant-cost industry. B. a decreasing-cost industry. C. an increasing-cost industry. D. encountering X-inefficiency.