If a hurricane were to wipe out the majority of the eastern seaboard in the United States, it would likely cause a:
A. short-run supply shock.
B. long-run supply shock.
C. long-run demand shock.
D. short-run demand shock.
Answer: B
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If bonds with different maturities are perfect substitutes, then the ________ on these bonds must be equal
A) expected return B) surprise return C) surplus return D) excess return
Stagflation is the combination of
a. falling output and a falling price level b. falling output and rising unemployment c. falling output and a rising price level d. falling output and falling unemployment e. rising unemployment and a falling price level
The government of a country decides to reduce fiscal spending on national defense. The resulting economic change will be represented by a(n): a. upward movement along the short-run Phillips curve. b. downward movement along the short-run Phillips curve. c. rightward shift of the short-run Phillips curve
d. leftward shift of the short-run Phillips curve.
When an external cost exists in the production of a good, firms tend to
A. over-produce the good. B. keep production constant throughout the year. C. under-allocate resources to the production of the good. D. under-produce the good since society pays these costs.