Why would one expect the AD curve to be vertical?
A. People do not make choices based on relative prices, but instead based on absolute prices.
B. If the price level rises, changes in choices by suppliers are offset by changes in demanders.
C. If the price level rises, relative prices haven't changed so people would not change their choices.
D. Substitution is not one of the reasons why the AD curve has its slope.
Answer: C
You might also like to view...
A surplus will tend to occur at which price in Figure 4-21?
A. P1 B. P2 C. P3 D. There will be no surplus at the prices shown.
You have a contract with someone who has agreed to pay you $20,000 in four years. She offers to pay you now instead. For which of the following interest rates and payments would you take the money today?
a. 8 percent, $15,000 b. 7 percent, $16,000 c. 6 percent, $17,000 d. All of the above are correct.
Public goods are any goods provided by units of local, state, or federal governments.
Answer the following statement true (T) or false (F)
An important routine function of the Federal Reserve Bank is to:
A. help large commercial banks develop correspondent relationships with smaller commercial banks. B. advise commercial banks as to the most profitable ways of reinvesting profits. C. provide facilities by which commercial banks and thrift institutions may collect checks. D. supervise the liquidation of the assets of bankrupt state banks.