Why is the supply curve vertical in this graph?
a. Q1 is fixed.
b. The movement from P1 to P2 is slight.
c. The movement from P1 to P2 is more than 10 percent.
d. Q1 increases upwards, not horizontally.
a. Q1 is fixed.
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Lucas argues that when policies change, expectations will change thereby
A) changing the relationships in econometric models. B) causing the government to abandon its discretionary stance. C) forcing the Fed to keep its deliberations secret. D) making it easier to predict the effects of policy changes.
Capital investment becomes more profitable for a business firm as the real interest rate decreases.
Answer the following statement true (T) or false (F)
A country has a comparative advantage in producing a good if it is relatively more efficient at making it.
a. true b. false
If a country exports the products it can produce at a low opportunity cost and imports the products it would otherwise produce at a high opportunity cost, we say that such trade is based on the
A. arbitrage pricing theory. B. theory of absolute advantage. C. theory of factor endowments. D. theory of comparative advantage.