Suppose the economy is at point B. If firms expect profits will be higher in the future, to what point might the economy's move in the short run?
A) It stays at point B.
B) It shifts to a point such as A.
C) It shifts to a point such as C.
D) None of the above answers are correct because it is the SAS curve that shifts, not the AD curve.
C
You might also like to view...
The producer price index focuses on price changes of domestically produced goods and includes services, construction, and imported goods
Indicate whether the statement is true or false
Which of the following is a correct statement about the labor market?
a. Workers determine the supply of labor, and firms determine the demand for labor. b. Workers determine the demand for labor, and firms determine the supply of labor. c. Workers determine the supply of labor, and government determines the demand for labor. d. The forces of supply and demand, while present in the labor market, have nothing to balance in that market.
Alpha Corporation has a price of $5 a share, outstanding shares of 2.5 million, retained earnings of $1 million dollars, and a dividend yield of 2 percent. It has a price-earnings ratio which is
a. high, perhaps indicating that people expect future earnings to rise. b. high, perhaps indicating that people expect future earnings to fall. c. low, perhaps indicating that people expect future earnings to rise. d. low, perhaps indicating that people expect future earnings to fall.
For most welfare recipients, the negative income tax plan would increase incentives to work.
Answer the following statement true (T) or false (F)