An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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Refer to Game Matrix V. Which of the following values of X and Y result in there being no pure strategy Nash Equilibrium?
a. X = 21, Y = 9. b. X = 19, Y = 11. c. X = 31, Y = 11. d. There will always be at least one pure strategy Nash Equilibrium in this game.
A decrease in the price of a factor of production will lead to an increase in the supply of goods that use the factor in production.
a. true b. false
Consider the supply and demand graph below to answer three questions: (a) Use a letter to identify the area of maximum consumer surplus; (b) Use a letter to identify the area of maximum producer surplus; (c) Why is the output level shown by the vertical
dashed line one that is allocatively efficient from a marginal cost and marginal benefit perspective? What will be an ideal response?
The supply-and-demand model may not be appropriate in markets with large transaction costs
Indicate whether the statement is true or false