To combat inflation in 1955 and 1956, the Fed reduced the money supply. In terms of the AS/AD model, this change should have:
A. made the AD curve flatter.
B. shifted the AD curve to the right.
C. shifted the AD curve to the left.
D. made the AD curve steeper.
Answer: C
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Which of the following is an example of the effect of a price floor?
A. Scalping of Super Bowl tickets B. Surplus cheese C. The New York city housing shortage D. Black markets E. Milk shortages
The law of diminishing returns states that as a firm increases
A) all the inputs is uses, the marginal product of each of these inputs always decreases. B) a variable input, with a given quantity of fixed inputs, the firm's marginal cost eventually decreases. C) a variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases. D) a variable input, given the quantity of fixed inputs, the firm's average total cost will eventually decrease.
The long-run market supply curve in a competitive market will
a. always be horizontal. b. be the portion of the MC that lies above the minimum of AVC for the marginal firm. c. typically be more elastic than the short-run supply curve. d. be above the competitive firm's efficient scale.
Quantitative easing refers to open-market purchases of assets other than Treasury bills.
Answer the following statement true (T) or false (F)