The more flexible prices are, the
A) greater demand shifts have to be to bring about a new equilibrium.
B) larger the shifts in supply will be after a change in demand.
C) greater the reliance by sellers to change the nominal price.
D) more quickly a shock to the economy can be absorbed.
Answer: D
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What does scarcity have to do with the fact that people must make choices?
What will be an ideal response?
Price ceilings and minimum wages may increase poverty in the long run because they tend to
a. decrease the incentive to work among the poor b. increase the level of saving among the rich c. increase productivity of labor among the rich and poor d. promote investment among the rich e. reduce the distortions in the price system
In many regulated industries, marginal cost will be
a. below average cost. b. above total cost. c. above marginal fixed cost. d. below incremental cost.
Depreciation
a. does not change the level of capital in the economy. b. is the decrease in the capital stock because of wear and tear c. is also known as capital consumption. d. Both answers B and C are correct.