Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y1.
C. P3 and Y1.
D. P3 and Y2.
Answer: D
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For movements along the long-run aggregate supply curve
A) potential GDP is dependent on the price level. B) the prices of goods and services change while the prices of productive resources hold steady. C) the price level and the money wage rate change by the same percentage. D) All of the above are correct.
Many book publishers use cost-plus pricing to establish prices for some of their books
Would you expect a publishing company to use a strict cost-plus pricing system for all its books? How might you determine if a publishing company actually does use cost-plus pricing for all its books?
If the United States produces only corn and Mexico produces only oil, the price of oil, in terms of bushels of corn,
a. can be no higher than the opportunity cost of oil in the United States b. must be higher than the opportunity cost of oil in the United States c. can be no higher than the opportunity cost of corn in the United States d. can be no lower than the opportunity cost of oil in Mexico e. must be higher than the opportunity cost of oil in Mexico
The primary concern of economics is the study of:
A. Why human wants exist and what motivates them. B. How to distribute goods and services according to human needs. C. How best to allocate scarce resources among competing uses. D. Who holds the most political power in a particular country.