Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?
The price level decreases and output is unchanged (returns to its natural rate).
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One of the defining characteristics of an oligopoly is that:
A. one firm's behavior can affect the others' profits. B. all firms act independently to create a perfectly competitive outcome. C. all firms act independently to create a monopoly outcome. D. None of these statements is true.
Which of the following is not a determinant of demand?
A) A change in taste and preference B) The number or buyers C) A change in the price of the item in question D) A change in the price of a substitute item
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
A firm that is operating at peak efficiency is
A. making a profit in the short run. B. taking a loss in the short run. C. operating at the minimum point of its ATC curve. D. taking a loss in the long run.