Answer the following questions true (T) or false (F)
1. The short-run aggregate supply curve is vertical.
2. When potential GDP increases, short-run aggregate supply also increases, but long-run aggregate supply does not change.
3. An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level.
1. FALSE
2. FALSE
3. TRUE
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A quota is
A) a government-imposed restriction on the quantity of a specific good that can be imported into a country. B) a tariff imposed on goods that are dumped into the home country. C) a tariff imposed on goods that are subsidized by their domestic governments and exported to other countries. D) a tariff based on the value of the imported good.
Other things constant, if wheat production is a price-taker industry, a decrease in the price of fertilizer used to grow wheat will
a. increase the supply of wheat. b. increase the demand for wheat. c. decrease the supply of wheat. d. do both a and b.
If the price elasticity of demand for a good equals one, then the demand for that good is:
A. perfectly elastic. B. unit elastic. C. inelastic. D. elastic.
The Bretton Woods Agreement
A) fixed the value of the U.S. dollar relative to gold. B) fixed the value of the U.S. dollar relative to the euro. C) required foreign central banks to hold certain minimum amounts of gold as foreign exchange reserves. D) required member nations, other than the United States, to disband their central banks.