What is a supply shock? What is a demand shock? Describe an example of a supply shock and of a demand shock
What will be an ideal response?
A supply shock is an event that fundamentally reduces society's ability to produce goods and services. Examples will vary, but one example is a natural disaster such as a blizzard, tornado, or hurricane.
A demand shock is an event that reduces the willingness or ability of buyers to purchase goods and services. Examples will vary, but one example is a decrease in consumer confidence due to economic uncertainty about unemployment or inflation rates.
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Because resources tend to be specialized, if a society chooses to increase production of military goods, this tends to
A. result in a decrease in the opportunity cost of more military goods. B. result in an increase in the opportunity cost of more nonmilitary goods. C. result in an increase in the opportunity cost of more military goods. D. change the position of the production possibilities curve. E. alter the slope of the production possibilities curve.
Consider two goods: peanut butter and jelly. If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars, what is the cross elasticity of demand? Are the goods substitutes
or complements?
During the antebellum period, the "Old Northwest" became the leading producer of
a. corn. b. wheat. c. hogs. d. All of the above.
Effective price floors prevent the market price from falling to reach equilibrium.
Answer the following statement true (T) or false (F)